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ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017 / 18 an expert medical team... technology that enables accurate diagnosis... EVIDENCE BASED CARE BY SKILLED PROFESSIONALS... and the best patient outcomes... here

About Us Asiri Hospital Holdings PLC is the largest hospital chain in Sri The commitment to quality is at the very core of the Asiri Health DNA. Lanka’s private sector healthcare industry. Since first commencing Testifying to this, Asiri Central Hospital is JCI (Joint Commission operations in 1986, the Group has evolved rapidly over the past International) accredited, earning the Gold Seal of Approval in three decades. quality and patient safety, while Asiri Surgical, Asiri Medical and Asiri Hospital - Matara are all working towards obtaining the ACHS Today, the Group’s flagship brand; Asiri Health is represented by (Australian Council on Healthcare Standards) accreditation. four fully-fledged hospitals; Asiri Medical Hospital, Asiri Surgical Hospital PLC, Asiri Central Hospital, Asiri Hospital – Matara, as well as Asiri Laboratories, the country’s largest island-wide private laboratory service, all of which are dedicated to serve the people of Sri Lanka in line with the Group’s mission “To care for and improve the quality of human life, through the provision of ethical healthcare solutions together with cutting–edge technology”.

The Asiri Health Centres of Excellence offer some of the most advanced clinical programmes in Sri Lanka and the wider Asian region. Focusing on certain critical disciplines such as Cardiac, Brain & Spine, Oncology, Bone Marrow Transplant and Stroke Care, these Centres of Excellence bring new hope to thousands of patients each year.

ASIRI HOSPITAL HOLDINGS PLC No. 181, Kirula Road, Colombo 5, Sri Lanka. Scan Tel : +94 11 452 3300 To Read on Fax : +94 11 250 8768 Centres of E-Mail : [email protected] Excellence Patient care that is elevated to new heights... here Asiri Bone Marrow Transplant Unit Charuni, who was diagnosed with Thalassemia, was one of the first patients to undergo a Bone Marrow Transplant at the Unit, in 2014. She has recovered completely now and sat her GCE Ordinary Level examination in December 2017. She got through with flying colours and is a source of great pride to the dedicated team who worked with her.

“I have no words to express my gratitude for the Asiri BMT unit staff who cared for me more than anyone has in this world. I was in a lot of pain and the team’s patience and caring words of encouragement gave me hope and strengthened me through the 45 day transplant process.” - Ms. Charuni Apsara (16 Years) Asiri Bone Marrow Transplant Unit

In operation since 2014, the Asiri Bone Marrow Transplant (BMT) unit holds the distinct The BMT unit’s highly honour of being Sri Lanka’s pioneer facility geared to perform bone marrow transplantation skilled and dedicated for patients with blood and bone marrow cancers, genetic blood-related disorders and other medical and nursing diseases, which cause the bone marrow to fail. The goal of BMT is to cure many diseases and types of cancer. When a person’s bone marrow has been damaged or destroyed due to a team work round-the- disease, a bone marrow transplant is probably the only hope for long term survival. clock to provide the best possible patient The Asiri BMT programme has changed the lives of many families and brought new hope to outcomes, including a dozens of patients since its launch in 2014. multidisciplinary approach A JCI (Joint Commission International) accredited facility in Sri Lanka, the facilities at Asiri that enables patients to Health BMT unit are among the best in the wider South Asian region and include; benefit from the opinions of many experienced ee The latest and most-advanced testing procedures to ensure accurate donor profiling physicians, not just one. ee Apheresis unit for plasma separation and peripheral blood stem cell harvesting ee State-of-the-art infection prevention facilities including three positive pressure rooms with hepafilteration facilities to prevent infections ee An in-house blood bank and stand-by transfusion service with irradiated blood products ee Dedicated facility for outpatient immunotherapy

The BMT unit’s highly skilled and dedicated medical and nursing team work round-the-clock to provide the best possible patient outcomes, including a multidisciplinary approach that enables patients to benefit from the opinions of many experienced physicians, not just one.

While working closely to develop care plans to meet the specific needs of each patient our team goes above and beyond, to offer patients, their caregivers, and families the support required to address the emotional, physical, and social challenges that often go along with bone marrow transplantation.

Since its inception a total of 22 patients with Thalassemia have been treated, enabling the Asiri BMT unit solidify its reputation as Sri Lanka’s premier facility specialising in curing Thalassemia.

The Asiri BMT Unit has been accredited as a training facility for medical post graduate trainees in clinical haematology and bone marrow transplantation by the Post Graduate Institute of Medicine, University of Colombo. III ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 The peace of mind that you need... here Asiri Brain & Spine Centre Mr. Attanayake, a Designer, suffered from a slipped (herniated) disk due to his work and was in a great deal of pain. He was successfully treated with a Lumbar Discectomy and returned to his daily routine in 3 days.

“After opting for surgery I received constant and ongoing care through continuous post-surgery monitoring. It is the after-care, encouragement and support extended to me by the entire team that helped me get back to my normal life within 3 days.” - Mr. Naline Attanayake (37 years) Asiri Brain & Spine Centre

Since its inception in 2010, the Asiri Brain & Spine Centre has continued to evolve on par with The Asiri Brain & Spine global standards and today is the most advanced facility of its kind in Sri Lanka. Located at Centre is also credited Asiri Central Hospital, the Asiri Brain & Spine Centre is probably the only facility in the country with advancing the field of with the ability to diagnose, treat and care for a wide variety of neurological disorders, all under one roof. Backed by the most extensive diagnostic and imaging facilities available, this unit Neurosurgery in Sri Lanka has the capacity to detect advanced conditions affecting the brain, spine, nervous system through new approaches and muscles, and rare genetic disorders such as Huntington’s disease and multiple system and treatment for atrophy, as well as multiple sclerosis and specific motor neuron diseases. neurological disorders. Our world-class Neurosurgical One of the most advanced departments of Neuroscience in the country, the Asiri Brain & Spine Centre since its establishment 8 years ago, has pioneered several groundbreaking neuro- theatres are outfitted with diagnostic techniques, among them Sri Lanka’s only Biplaner Neuro-angiography unit and the the latest intra-operative only CT “Brain Lab” currently available in the country’s private sector healthcare system. monitoring mechanisms including Neurosurgery The Asiri Brain & Spine Centre is also credited with advancing the field of Neurosurgery in Sri microscopes and Neuro- Lanka through new approaches and treatment for neurological disorders. Our world-class Neurosurgical theatres are outfitted with the latest intra-operative monitoring mechanisms navigation systems. including Neurosurgery microscopes and Neuro-navigation systems to assist our eminent panel of Neurosurgeons to provide cutting-edge treatment facilities on par with international standards.

The Asiri Brain & Spine Centre also includes a special 12-bed Neuro-Intensive-Care-Unit offering dedicated 24-hour nursing care to deliver patient-centered care tailored for each individual’s needs.

A testament to the superlative standards and a source of great pride to Asiri Health was having the Centre selected to host the clinical component of the first International FRCS examination in Neurosurgery, held in Colombo. This prestigious event was organised in conjunction with the Joint Surgical Colleges Fellowship Examination (JSCFE) Board and the Joint Colleges Intercollegiate Examination (JCIE) Board of the Royal Colleges of Surgeons in the UK.

Over the years, the Asiri Brain & Spine Centre has provided a new lease of life to thousands of patients by offering them successful outcomes for some of the most debilitating neurological ailments. Hundreds of successful surgeries are performed at the Asiri Brain & Spine Centre, among them are many firsts, including Sri Lanka’s first-ever epilepsy surgery in 2005 and the only Parkinson surgery in the country to date. V ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 The best in healthcare innovation in Sri Lanka...

here Asiri Heart Centre Mr. Fernando was diagnosed with 2 blocked arteries and was required to undergo immediate heart surgery. He was concerned about the usually long recovery time, but was offered the option of Minimally Invasive Cardiac Surgery (MICS), commonly known as ‘key hole’ surgery. His treatment was successful and he returned home in just 3 days.

“Key hole surgery made me healthy again and I was able to return to my normal life, which involves a lot of foreign travel, very quickly.” - Mr. G. Gamini Fernando (58 years) Asiri Heart Centre

The Asiri Health Heart Centres are among the few facilities in the country with the advanced Equipped with the latest capability to diagnose, treat, and rehabilitate acute cardiovascular disease. Combining the world-class technology world class technology and diagnostic capabilities as well as the country’s finest medical covering every aspect professionals, our heart centres located at Asiri Surgical Hospital and Asiri Central Hospital are designed to ensure high quality clinical care and the best possible patient outcomes. of cardiac care, from prevention to diagnosis Equipped with the latest world-class technology covering every aspect of cardiac care, from and disease management, prevention to diagnosis and disease management, the Asiri Health Cardiac Care Programme the Asiri Health Cardiac provides a comprehensive suite of diagnostic and treatment facilities including non-invasive Care Programme provides diagnostic facilities, cardiac catheterisation and angiography along with a wide range of interventional cardiac and vascular procedures, to give a 3600 assessment of the patients’ a comprehensive suite of potential heart condition. diagnostic and treatment facilities. Our Cardiac Programme benefits from advanced Cardiac Catheterisation Laboratories located at Asiri Central Hospital & Asiri Surgical Hospital. Both are staffed by nurses who have undergone specialised training in post-surgical cardiac care; post pacemaker insertion care; and monitoring of patients who have had heart attacks, angioplasty, or stent placement. A higher staff to patient ratio is maintained at each Cardiac Unit, to ensure individual patients and their families receive the support needed to help them to adjust to some of the lifestyle changes that are necessary to improve the future health of the patients. The Asiri Health Cardiac Care progarmme is probably the only one in the country, where patients, depending on their individual needs, have access to personalised care from a multidisciplinary team of physical therapists, clinical psychologists, dieticians and wound care specialists for the long- term management of their heart conditions.

The Asiri Surgical Heart Centre is also the only facility in the country to have an active community programme that offers free heart surgery for underprivileged children. First launched in 2011, the effort has helped a total of 146 children with congenital heart disease to receive free heart surgery and after care that gives them renewed hope for a normal life.

Based on the belief that prevention is better than cure, the Asiri Heart Centres run regular community outreach programmes to educate the public on the importance of early detection and raise awareness regarding lifestyle and healthcare choices that contribute towards minimising the incidence of heart disease. VII ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Ensuring timely care in an emergency, followed by effective rehabilitation...

here Asiri Stroke Unit Mrs. Perera entered the Stroke Unit experiencing weakness on her left side. She was treated with the ‘clot busting injection’, but was slow to show signs of recovery. Hence the team quickly used the ‘endovascular clot retrieval’ technique to open up the blocked blood vessel. She recovered fully within hours and was able to return home in just 4 days. She was the first-ever patient in Sri Lanka to receive both forms of treatment.

“Thanks to the swift action by the team at the Asiri Stroke Unit, even today, four years on I am able to lead a normal, active life with no after effects normally associated with a stroke survivor.” - Mrs. Prince Perera (80 Years) Asiri Stroke Unit

The Asiri Stroke Unit is the only facility in Sri Lanka with the capacity to offer preventive care, The only dedicated treatment of acute stroke and therapeutic facilities for the on-going rehabilitation following a stroke unit in the country stroke, all under one roof. equipped with clot The only dedicated stroke unit in the country equipped with clot busting and clot retrieval busting and clot retrieval technology for the removal of a clot from a blood vessel to prevent the onset of a stroke. technology for the removal The Asiri Stroke Unit is led by a multidisciplinary Stroke Care Team including Consultant of a clot from a blood vessel Physicians, Interventional Radiologists, Neurologists, Therapists and trained nurses geared to to prevent the onset of a provide world-class treatment 24 hours a day. stroke. Acute treatment for a stroke needs to be provided within 4.5 hours from the onset of a stroke. To cater to this need, our unit is open to receive patients round the clock, 365 days of the year. Our response time from patient entering hospital to receiving treatment (i.e. Door-to- needle time) is less than 30 minutes. This prompt state of the art evidence based process can potentially reverse paralysis within hours.

Each stroke patient is accommodated in an individual room equipped with all the latest facilities to make their stay as comfortable and as convenient as possible, with a dedicated nursing team being assigned for acute stroke rehabilitation in order to prevent long-term disability.

With a stroke, rehabilitation begins immediately, and our team works to develop a customised treatment plan that takes into account each patient’s overall condition, special needs, personal goals and specific challenges. We see each person as an individual and aim to work in partnership with our patients and their family to ensure the best medical care and fullest possible recovery following a stroke.

The Asiri Stroke Unit provides the ideal environment for rehabilitation through its on-site facilities for exercise and activities. Occupational Therapists carry out physical and cognitive assessments, planning goal-related treatment interventions to prevent disability and promote independence, while at the special on-site gym and hydrotherapy unit, physical therapists work with patients to optimise muscle tone and help them regain strength, balance and coordination. Meanwhile speech and language therapists work to help the patient to overcome swallowing and communication difficulties, while dieticians are available to provide acute and long term nutritional advice and education to the patient and their caregivers.

The Unit also has a dedicated kitchen and bathroom, where occupational therapists teach patients to use techniques and tools that can make everyday activities simpler and safer when they continue their recovery at home.

For stroke patients suffering with persisting functional problems, the Asiri Stroke Unit also offers outpatient rehabilitation facilities to enable them to lead a normal life. IX ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 The technology that supports minimally invasive procedures for accurate treatment... here Asiri Interventional Radiology Unit Mr. Dias had been suffering with severe headaches for several weeks with episodes of losing consciousness. Entering Asiri Central Hospital, he was found to have a ruptured aneurysm. He was treated successfully with an endovascular coiling procedure.

“I had lost all hope. I did not want open brain surgery. My survival is a miracle and it is all thanks to the great doctors and the team who saved my life with endovascular coiling.” - Mr. Kalyana Dias (51 Years) Asiri Interventional Radiology Unit

The division of Interventional Radiology at Asiri Central Hospital was established in 2013 with Today, many conditions the installation of the first biplane neuro digital subtraction angiography unit in Sri Lanka. The that once required fully fledged unit is functional 24/7 with dedicated and trained interventional Radiologists, surgery can be addressed Anaesthetists and a team of supporting staff dealing with any interventional procedure from minor peripheral interventions to complex neuro interventions, with results comparable to any through interventional centre of excellence in the world. procedures with equal or better outcome, and in The unit has its own well equipped patient receiving area and recovery area with facilities for some situations, it is the anaesthesia. only available treatment Interventional Radiology is one of the most technically advanced and rapidly developing modality to prevent fields in current day medical practise. It is a practice where patients are treated with minimally mortality or significant invasive techniques using image guidance. Today, many conditions that once required morbidity. surgery can be addressed through interventional procedures with equal or better outcome, and in some situations, it is the only available treatment modality to prevent mortality or significant morbidity.

Neuro interventional procedures in patients with haemorrhage due to ruptured aneurysms and arteriovenous malformations have replaced major neurosurgery, in most instances with excellent results. These procedures, routinely performed in the unit as emergency and elective procedures, minimise physical and psychological trauma to the patient with faster recovery and better outcomes, changing horizons for the patients facing these acute problems. Placement of flow diverter stent as definitive treatment for giant and recurrent aneurysms was performed for the first time in Sri Lanka in 2015 in the unit, and has become a routine procedure for these patients.

Endovascular management of acute ischaemic stroke, has revolutionised the potential outcome for patients facing this debilitating condition, which if not treated promptly will result in a lifetime of disability and agony for both the patient and care-givers. The first mechanical clot retrieval in Sri Lanka was performed successfully at Asiri Central Hospital in 2013. Since then it has become standard treatment for suitable patients presenting to hospital within the window period, with great success.

The unit routinely performs a wide variety of life altering peripheral interventions as well. These include treating acute bleeding, formation of porto systemic shunts, embolisation of tumours, placement of Biliary and ureteric stents, treatment of aortic aneurysms. the only fully fledged department of nuclear Medicine in Sri Lanka ... here

Asiri Department of Nuclear Medicine

The only facility in the country that provides a full range of services in Nuclear medicine, the Asiri Department of Nuclear Medicine is equipped with cutting edge technology to provide high-resolution imaging to support diagnosis of cancer, staging of cancer and also provides information on effectiveness of treatment following radiotherapy and chemotherapy.

Manned by a highly specialised team of experienced radiologists, radiographers and physicists, every patient who visits the Asiri Surgical Hospital, Department of Nuclear Medicine benefits from customised investigation protocols similar to any international facility around the world.

Patients have access to the latest PET imaging technology, a minimally invasive diagnostic imaging procedure based on Radioactive Isotopes that scan the entire body in a single exam to detect cancer cells the size of a pea. Our state-of-the-art PET/CT scanner generates the highest quality images using the lowest radiation doses and shortest scan times possible, with the goal of providing each patient with the safest and most effective imaging examination available.

In 2017, a new Gamma Camera also known as scintillation camera was added to the resources at the Asiri Department of Nuclear Medicine. Being the most advanced Gamma Cameras in operation in the country, the new unit has made it possible for clinicians to obtain very precise pictures of the area of the body being imaged, making invasive procedures unnecessary. Our team works to combine the results obtained from X-rays, CT Scans, ultrasounds, and magnetic resonance imaging (MRI) to ensure the best possible outcomes for stepping in to fill another void in cancer treatment, Asiri Surgical hospital commenced radioactive Iodine treatment for patients with Thyroid cancer and thyrotoxicosis as an effective treatment delivered through the nuclear medicine department from early 2018. Contents

Group Profile Group Leadership Reports Financial Information IFC About Us 21 Chairman’s Message 68 Independent Auditors’ Report 1 Vision, Mission and Values 23 Media Highlights 72 Statement of Profit or Loss 2 Key Milestones 25 CEO’s Review 73 Statement of Comprehensive Income 4 Highlights of the Year 74 Statement of Financial Position 5 Board of Directors Strategy and Focus 76 Statement of Changes in Equity 8 Group Senior Management Team 28 Healthcare in Sri Lanka 78 Statement of Cash Flows 9 Group Consultant Medical Team 29 Operations Review 80 Notes to the Financial Statements 39 Group Sustainability Report Group Overview 49 Risk Management Report Supplementary Information 13 Group Structure 55 Corporate Governance Report 134 Shareholder Information 14 Value Creation Process 58 Ethics Committee Report 136 Five Year Summary 16 Key Financial Highlights 59 Audit Committee Report 138 Notice of Meeting 17 Group Certifications & Accreditations 61 Remuneration Committee Report 139 Form of Proxy 18 Economic Value Added Statement 62 Related Party Transactions Review IBC Corporate Information 19 Report Overview Committee Report 63 Statement of Directors Responsibility 64 Annual Report of the Board of Directors on the Affairs of the Company 1 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Vision, Mission and Values

Vision

To be a leading healthcare provider in South Asia with highest quality of clinical standards

Mission

To care for and improve the quality of human life, through the provision of ethical healthcare solutions together with cutting–edge technology

Values

ee Caring with a human touch ee Respect for all stakeholders ee Innovation and forward focus ee Caring for society ee Caring for our employees 2 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Key Milestones

2004 2012

ee 1.5 Tesla Multifunctional ee Megapulse Stone Laser MRI scanning system unit to vapourise kidney that supports high- 2008 stones through an resolution whole body Ureteroscope imaging ee Thromboelastometry to ee 64 Slice CT scanner determine the interaction that produces precise of blood coagulation images of rapidly moving factors during clotting organs like the heart and and subsequent lungs fibrinolysis

2005 2013

ee Blood Irradiator which ee The first Bi Planer Neuro uses X-Ray irradiation Cath lab, to assist in to irradiate blood and 2011 advanced neurovascular blood products and cardiac procedures ee Extra-corporeal Shock ee Setting up of a dedicated Wave Lithotripsy that ee PET / CT scan, an Stroke Unit uses external shock advanced nuclear wave treatment to imaging technique that fragment renal stones delivers information about both the structure and function of cells and tissues in the body during a single imaging session 3 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Key Milestones

2014 2018

ee Bone Marrow Transplant ee Scheduled launch of the Unit to treat blood and Asiri-AOI Cancer Centre bone marrow cancers, 2016 including multiple myeloma, leukemia and thalassemia ee Fully-fledged Liver ee Digital Mammogram transplant unit providing Machine for the early both in-patient and detection of breast outpatient services cancer

2015 2019

ee Minimal Invasive cardiac ee Scheduled opening of surgery performed for Asiri Hospital Kandy, 175 the first time in Sri Lanka 2017 bed facility, with latest technology

ee The first intraoperative CT Scan (BrainLab-Aero) with intraoperative neuro and spinal navigation ee A fully fledged oncology unit, with the latest linear accelerator for radiation therapy for cancer patients, is being set up 4 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Highlights of the Year

2017 2018

September January ee Asiri Surgical Hospital enters JV with American Oncology ee Asiri Central Hospital launched the Asiri Breast Care Centre Institute A unique service model where a Multi-disciplinary team of Specialist A world class Cancer Treatment Centre complete with nuclear Consultants provide end-to-end solutions for all breast related medicine and radiotherapy treatment will open second half 2018. concerns.

October February ee Asiri Central Hospital, Bone Marrow Transplant Unit ee Asiri Central Hospital, Brain & Spine Centre Selected as a training facility for medical post graduate trainees in The Centre was selected to host the clinical component of the first clinical haematology and bone marrow transplant. The programme International FRCS examination in Neurosurgery, held in Colombo. is approved by the Post Graduate Institute of Medicine, University of This prestigious event was organised in conjunction with the Joint Colombo. Surgical Colleges Fellowship Examination (JSCFE) board and the Joint Colleges Intercollegiate Examination (JCIE) Board of the Royal The unit has performed 22 bone marrow transplants in its 4 years of Colleges of Surgeons in the UK. operations. Forty-four candidates from different parts of the world sat the ee Asiri Surgical Hospital, Centre for Nuclear Medicine examination with a contingent of eighteen Senior Consultant Introduced the Gamma Camera SPECT scanner. This latest imaging Neurosurgeons arriving from the UK. technique plays a vital role in oncology treatment. March ee Asiri Surgical Hospital, Geriatric Care programme ee Asiri Central Hospital, Brain & Spine Centre Enriching everyday living for seniors through a collection of Life changing Scoliosis Surgery was performed by the specialised medical services provided by a team of elder-care Neurosurgical team at the hospital, for the first time. professionals ee Asiri Surgical Hospital, 2nd Cardiac Catheterisation Laboratory ee Asiri Medical Hospital Our Cardiac Cath Labs offer the most current and state of the art Phase 1 of a complete overhaul of this esteemed institution was facilities for diagnostic & stenting procedures. completed, giving patients arguably the nicest OPD experience in Colombo. Phase 2 is now in progress and will offer patients the best A second Cath Lab will be introduced at Asiri Central Hospital too in modern hospital facilities when completed. within the year, making Asiri’s Heart Centres, by far the largest in the private sector, in Sri Lanka.

ee Asiri Medical Hospital, In Vitro Fertility (IVF) Treatment Centre The hospital will extend its expertise in Mother & Baby and Neonatal Care, to offer a complete IVF Treatment Centre, within the year. 5 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Board of Directors

01 02 03 04 05 06 07 08

01. Mr. Vishal Bali - Director 05. Mr. Ashok Pathirage - Chairman/Managing Director 02. Mr. Samantha Rajapaksa - Director 06. dr. Sivakumar Selliah - Deputy Chairman 03. Mr. Ankur Thadani - Director 07. Mr. Harris Premaratne - Director 04. dr. Manjula Karunaratne - Group Chief Executive Officer 08. Mr. Jeremy Huxtable - Director 6 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Board of Directors

Mr. Ashok Pathirage Committee, Related Party Transaction Committee served as the Managing Director of Sampath Chairman/Managing Director and Human Resource & Remuneration Committee Bank from 2009 to December 2011. He was the which are sub committees of the Board, of some of Managing Director of Cargills Bank Limited from Mr. Pathirage is one of the country’s leading the companies listed above. 2012 to 2014. He held the position of Chairman of entrepreneurs and business leaders. He is the Sri Lanka Banks’ Association. He was the Deputy founder and Chairman/Managing Director of Dr. Manjula Karunaratne Chairman of Pan Asia Bank in the year 2017, and Softlogic Group. MBBS, M.Sc (Trinity, Dublin), Deputy Chairman of Softlogic Finance PLC during Dip. MS Med (UK) MSOrth Med. (Eng) 2015-2017. Mr. Pathirage is also Chairman/Managing Director Group Chief Executive Officer of the Asiri Hospital chain and the Chairman of He is a Director of Softlogic Holdings PLC and Softlogic Capital PLC, Softlogic Finance PLC, Dr. Manjula Karunaratne was appointed to the Softlogic Capital Limited and also serves on the Softlogic Life Insurance PLC and Odel PLC which Board of Asiri Hospital Holdings PLC and Asiri Board of Asiri Hospital Holdings PLC, Asiri Surgical are listed public companies on the Colombo Stock Surgical Hospital PLC in 2006, and currently serves Hospitals PLC and Central Hospital Limited. He Exchange in addition to the other companies of as the Chief Executive Officer of the Asiri Group. He functions as the Chairman of the Remuneration the Group operating in Leisure and Restaurants, also serves on the Boards of Central Hospital Ltd., Committee and also a member of the Audit Retail, Automobile and ICT industries. Asiri Central Hospitals Ltd., Asiri Hospital Matara Committee of all three hospitals. (Pvt) Ltd., Asiri Diagnostic Services (Pvt) Ltd. and He is also the Deputy Chairman of National Asiri Hospital Kandy (Pvt) Ltd., He previously held Mr. Samantha Rajapaksa Development Bank PLC and the Chairman of NDB the positions of Medical Director, Asiri Hospital Director Capital Holdings Limited. Holdings PLC and was Group Chief Operating Officer, Asiri Hospitals Group. Dr. Karunaratne is a Mr. Rajapaksa is a Fellow member of the Institute Dr. Sivakumar Selliah Specialist in Sports/ Orthopedic Medicine. of Chartered Accountants of Sri Lanka, the MBBS, M.Phill Chartered Institute of Management Accountants Deputy Chairman He possesses over 25 years of experience in of UK and the Chartered Institute of Marketing of the field of healthcare, and is responsible for the UK. He also holds an MBA from the University of Sri Dr. Selliah holds an MBBS Degree and a Master's overall medical policy of the Group. Under his Jayewardenepura. Degree (M.Phill), and has over two decades guidance the Group has introduced over twenty of experience in diverse fields, which include five new medical procedures and technologies He began his career at Ms. Ernst & Young. He manufacturing, healthcare, plantations, packaging, to Sri Lanka amongst which are the country’s first went on to serve as Director/General Manager at insurance, retail and logistics. Bone Marrow Transplant Unit, minimally invasive Informatics International. cardiac surgery service, first fully fledged stroke Dr. Selliah is currently the Deputy Chairman of Asiri unit and a high end interventional neuroradiology Thereafter, he took on the appointment of Director/ Hospital Holdings PLC, Asiri Surgical Hospital PLC unit. In addition a ‘live donor’ Liver Transplant Chief Executive Officer of CF Venture Fund Ltd. He and Central Hospitals Private Ltd. He is a Director service is currently being set up. was also appointed as a Group Director of Central of Lanka Tiles PLC, HNB Assurance PLC, Softlogic Finance Co. PLC during the same period. He Holdings PLC, ODEL PLC, Lanka Walltiles PLC, Lanka Mr. Harris Premaratne thereon took a posting overseas as Senior Project Ceramic PLC, , Swisstek (Ceylon) PLC and Swisstek Director Manager at AT&T Inc. USA. Aluminium Pvt Ltd. Dr. Selliah is also the Chairman of JAT Holdings Pvt Ltd , Vydexa (Lanka) Power Mr. Premaratne was appointed to the Board in He returned to Sri Lanka in 2008 to take up the Corporation Pvt Ltd and Cleanco Lanka Pvt Ltd. March 2008 after 40 years of banking experience appointment as Group Director of Kshatriya with Commercial Bank. He is specialised in Holdings PLC and thereafter joined as a Group Dr.Selliah also serves on the Audit Committee, Corporate Banking, and is an Associate of the Director of the Softlogic Group responsible for Investment Committee, Strategic Planning Chartered Institute of Bankers of London. He Group business development initiatives and 7 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Board of Directors as Director/ Chief Executive Officer of Softlogic Mr. Huxtable also serves as a Board Member on integrating healthcare strategy with operations Communications Ltd handling the Nokia the Board of Dialog Broadband Networks (Private) and management has set industry benchmarks. operations in Sri Lanka and the Maldives. Limited and Headstart (Pvt)Ltd. Mr. Bali completed his Bachelors in Science and Post graduation in Business from Bombay Mr. Rajapaksa thereafter in 2012 took up the Mr. Vishal Bali University and completed an advance programme position of Group Managing Director of Associated Director in hospital management from Harvard Medical, Motorways (Pvt) Ltd. Boston. He sits on the board of leading healthcare Mr. Bali brings with him 27 years of experience in organisations and has been an invited member of Mr Rajapaksa currently serves as the Chairman of building and leading global healthcare delivery the Strategic Initiatives group of Joint Commission Kitra Holdings (Pvt) Ltd. and the Rakuen Group of organisations through organic and M&A driven International, US and a past member of the Hotels. He also currently serves as Director of Bank strategic growth initiatives across Asia Pacific. His Global Agenda Healthcare Council of the World of Ceylon, Asiri Hospitals Holdings PLC and Asiri experience of managing a billion dollar integrated Economic Forum. His keen interest in education Surgical Hospital PLC. healthcare delivery organisation comprising and globalisation of healthcare takes him to Hospitals, Diagnostics, Primary Care and Daycare leading Healthcare Education Institutes and He is also the recipient of the Platinum Honors Speciality in diversified geographies of India, Business Schools globally which include case Award in recognition of Professional Excellence Australia, New Zealand, Hong Kong, Singapore, studies at the Harvard Business School. He is an in the field of Management from the Postgraduate Vietnam, Sri Lanka and Dubai has given him the active member of various Industry bodies and Institute of Management from the University of Sri exceptional opportunity to transform healthcare globally recognised industry public speaker. Jayawardenepura, businesses in both developing and developed countries. Mr. Bali Co-Chairs Healthcare Services for Mr. Jeremy Huxtable Federation of Indian Chamber of Commerce and Director Mr. Bali is currently Asia Head - Healthcare , Industry. TPG Growth which is amongst the leading Mr. Huxtable was appointed to the position of private equity firms globally. He is also Executive Mr. Ankur Thadani Group Chief Officer – Enterprise Business of Dialog Chairman, Asia Healthcare Holdings Pte. Director Axiata PLC with effect from 19th April, 2012. He counts a total of 20 years industry experience in Prior to his current assignment he was the Group Mr. Thadani is a Vice President with TPG Growth telecommunications on the backdrop of a multi- CEO for Fortis Healthcare Limited which is the and is focused on healthcare and consumer country and multi-sector management career leading provider of healthcare services in India sectors. He joined TPG in 2013 and has worked spanning over 3 decades. with a network of 68 hospitals and had earlier on multiple investments in India and the broader built Asia’s leading integrated healthcare delivery south Asia region. He currently serves on the Mr. Huxtable joined the Group Senior Management system with presence across 12 countries and a board of CTSI, Rhea Healthcare, Fourth Partner Team of Dialog following a stint close upon 7 years human capital base of more than 20,000 people. Energy Pvt. Ltd. and Asiri Hospitals. Prior to joining as the Managing Director of Suntel Ltd. Prior to taking His earlier roles also include CEO for Fortis TPG, Mr. Thadani was working with India Equity the helm at Suntel in 2005, he held several senior Healthcare International in Singapore and CEO Partners, an India focused private equity fund management positions in the Scandinavian region for Fortis Hospitals in India. His past assignment where he worked across consumer, financial with Orange International, the mobile arm of France also includes spearheading the growth and services and healthcare sectors. Mr. Thadani Telecom including that of CEO of Orange Sweden, transformation of Wockhardt Hospitals from a received his MBA from IIFT, Delhi where he was a 3G green-field start up and that of Director for single hospital to one of India’s largest speciality awarded the Gold Medal for outstanding overall Strategy and Planning at Orange Denmark. Prior to hospital chains as its CEO & Managing Director. achievement. He completed his Bachelors in joining Orange, he held the position of Vice President He has successfully led post merger integration Engineering from Mumbai University. at Fortunecity.com an internet start-up that was listed and divestments of multiple healthcare delivery on the German Neuer Market. assets in different countries. His expertise in 8 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Group Senior Management Team

Seated form Left to Right Mr. N. P. John - Director Laboratory Services | dr. Samanthi De Silva - Director Operations - Asiri Medical & Surgical Hospitals Dr. Ruwan Senatilleke - Medical Director - Asiri Central Hospital | Mrs. Mihiri Cabandugama-Kuruppu - Director Strategic Planning & Laboratory Development | Mrs. Thelani Weerasinghe - Director Nursing

Standing Left to Right Dr. Hasanthie Iddamalgoda - Medical Director - Asiri Medical Hospital | dr. D. H. K. Baranage - Medical Director - Asiri Surgical Hospital Mr. Nihal Rathnayake - Director Operations - Asiri Central Hospital | Mrs. Indresh Puvimanasinghe Fernando - Chief Process Officer Mr. Ajith Karunarathne - Chief Financial Officer | Mrs. Hasanthi De Saram Karandagaspitiya - Group Head HR & HRD Mr. N. P. Pasqual - General Manager - Asiri Hospital Matara | Mrs. Rochelle Rodé de Silva - Director Marketing Mr. Anthony Benjamin - Head of Business Development 9 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Group Consultant Medical Team

Dr. S D Athukorala Prof. L R Amarasekara Dr. Y K M Lahie Dr. Anil Perera Consultant Clinical Bacteriologist Consultant Histopathologist Consultant Cardiothoracic Surgeon Consultant/Head - Dept. of Anaesthesiology - Asiri Medical & Asiri Surgical Hospital

Dr. Himaru Wirithamulla Dr. Thushara Fernando Dr. Gamini Jayaweera Dr. Gayani Senanayake Consultants General Surgeon Consultant Anaesthesiologist Consultant /Head - Dept. of Consultant Anaesthesiologist Transfusion Medicine - Asiri Group

Dr. Hiranthi Abeysinghe Dr. Vernon Manil Fernando Dr. Rangika Goonaratne Dr. Saman Perera Consultant Anaesthesiologist Consultant Orthopedic Surgeon Consultant Eye Surgeon Consultant Radiologist 10 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Group Consultant Medical Team

Dr. Lallindra Gooneratne Dr. Rohini Ranwala Dr. Gulpa Subasinghe Dr. Sumedha Amarasekara Director- Bone Marrow Transplant Clinical Director - Dept. of Neuro Consultant Radiologist Consultant Orthopaedic Surgeon & Clinical Haematology Unit - Asiri Science, Asiri Central Hospital Central Hospital

Dr. Darshani Amarasinghe Dr. Stella Fernando Dr. Romanie Nishanthi Fernando Dr. Dinesh De Silva Consultant Anaesthesiologist Consultant Aaesthesiologist Consultant Obstetrician & Consultant Eye Surgeon Gynaecologist

Dr. V P Gamage Dr. Chrishantha Mendis Dr. Vivek Guptha Dr. Shantha Hettiarachchi Consultant Surgeon Consultant/Head - Dept. of Senior Consultant Cardiothoracic Consultant/Head - Dept. of Radiology Anaesthesiology - Asiri Central Surgeon - Asiri Medical and Asiri Surgical Hospital Hospital 11 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Group Consultant Medical Team

Dr. Lakmali Paranahewa Dr. Sunil Perera Dr. Kantha Samarawickrema Dr. Ajith Karunaratne Consultant/Head - Dept. of Radiology Consultant/Head - Dept. of Neuro Consultant/Head – Dept. of Nuclear Senior Consultant Cardiothoracic - Asiri Central Hospital Science, Asiri Central Hospital Medicine Surgeon

Dr. Shama Goonathilake Dr. Rajeeva Pieris Prof. Vajira Dissanayake Dr. Menik Goonewardhene Consultant Clinical Oncologist - Asiri- Consultant Cardiothoracic Surgeon Consultant Medical Geneticist Consultant Neonatologist AOI Cancer Centre (PVT) Ltd.

Dr. Thurul Attygalle Dr. Gitanjali Jayathilaka Dr. Nihal Wijewardhana Dr. Philomena Chandrasiri Resident Physician - Stroke Unit Consultant Anaesthesiologist Consultant Interventional Radiologist Consultant Microbiologist/ Head of infection Control 12 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Group Consultant Medical Team

Dr. Natasha Peiris Dr. Kalyani Miranda Dr. Dishna De Silva Consultant Resident Physician Consultant Radiologist Consultant Paediatrician

Not Pictured Dr. Chandana Kanakaratna Consultant Physician and Elderly Care Specialist (Geriatrician) 13 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Group Structure

Asiri Hospital Holdings PLC Asiri Surgical Hospital PLC Central Hospital Ltd Identified as the parent to the Asiri Group of With a bed capacity of 150, Asiri Surgical Offering international standards in healthcare, Hospitals, Asiri Medical Hospital has grown Hospital offers specialised surgical care Asiri Central Hospital is a flagship entity of into a leading health care provider with a 110 and treatments using the latest medical the Asiri Group of Hospitals. With its luxurious bed hospital. It provides total in-patient care technology, inclusive of several Intensive advanced medical facilities, this 13-storey consisting of Medical, Maternity, Paediatric Care units, Emergency Treatment services, 264-bed multi-specialty general hospital is a and Critical Care wards. Asiri Hospital consists Modern Operating Theatre suites, fully fledged one-stop medical centre that offers diagnostic, of two Intensive Care Units including a state- Urology services and a state of the art Heart therapeutic and intensive care facilities. Asiri of-the art Neonatal Intensive Care Unit, Dialysis Centre which offers world class Cardiac Care. Central specialises in Neuro Sciences and Unit, well equipped Operating Theatres and It is recognised as the most technologically Cardiac Care and is equipped with the latest Emergency Medical Service Unit etc. advanced private hospital in the country. medical facilities which can cater to any emergency in those fields.

Asiri Hospital Matara (Pvt) Ltd Asiri Hospital Kandy (Pvt) Ltd Asiri Laboratories Providing the people of southern Sri Lanka A 175 bed multi discipline hospital housing Being the largest laboratory network with the with convenient access to treatment and state of the art technology, some of which largest portfolio of diagnostic analyses in Sri services, Asiri Hospital Matara is a fully owned will be the first for the Central Province. Lanka, Asiri Laboratories has well cemented subsidiary of the Asiri Group of Hospitals. The Hospital is scheduled to commence not only an enviable market share but is Incorporated in 2007, it acquired Matara Medi operations in the first quarter of 2019. unequivocally the singular most referred to House (Pvt) Ltd in 2010. It now consists of two testing facility by nearly every hospital in the hospitals that function as one entity with a bed country both in the private and public sectors. capacity of 60. The Hospital offers a range of general and surgical care facilities. 14 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Value Creation Process

CAPITAL INPUTS

Financial Capital The pool of funds consisting of funds reinvested in the Group, revenue generated, long- and short-term loans and equity

Manufactured Capital The Group’s physical infrastructure consisting of buildings, equipment, facilities, IT systems etc. that are required to conduct day-to-day operations

Intellectual Capital The intangible assets including the brand reputation, quality certifications and other accreditations that are unique to the Group Vision | Mission | Values

Human Capital Key Value The skills and experience of our employees Drivers * that enable us to implement our strategy and deliver our products and services E XT ERN A L ENVIRON M EN T

Social and Relationship Capital The long-term relationships that we have cultivated with suppliers, business partners and other key stakeholders

Natural Capital The natural resources that we use for the delivery of our service 15 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Value Creation Process

* Key Value Drivers STAKEHOLDER DELIVERABLES ee Capacity - 05 fully-fledged hospitals (+ 1 under construction) + 08 Centres of Excellence + Patients island-wide laboratory network Excellent patient-centered care on par with ee Quality and Safety - centered culture - international standards Accreditations from JCI (Joint Commission International), ISO 14001: 2015 (Environmental Management System), ISO 9001: 2015 (Quality Management System), OHSAS 18001 : 2007 (Occupational Health and Safety Management Employees System), ISO 22000 : 2005 (Food Safety Safe, secure and progressive work Management System) environment to promote professional and ee Fully-fledged healthcare solutions - Our personal growth Centres of Excellence across clinical and medical specialties, together with our ambulatory services, provide patients with integrated care Shareholders and solutions. Greater financial stability and improved ee Professional Expertise - experienced team returns of personnel, including; medical specialists, nurses, allied health personnel as well as hospital management and the operations team ee Sustainability - delivering sustainable value to all Suppliers stakeholders through the Commitment to Quality Better overall standards through ethical and Patient Safety, Focus on our People, Care for business practices the Environment and Support for Communities ee Innovation - bringing in new medical knowledge into the country through investments the latest medical equipment, operations and systems Community infrastructure, which enable patients to benefit Access to free healthcare services from the latest breakthrough medical treatment at a fraction of the cost of obtaining treatment overseas ee Ethics and Governance – build a strong foundation for responsible healthcare practices Regulator that serve the best interest of patients Raising nation-wide healthcare standards ee Collaborative Partnerships - value-adding strategic tie-ups to generate a sustainable competitive advantage for the long term 16 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Key Financial Highlights

Group 2017/18 2016/17

Financial Performance (Rs. Mn) Revenue 12,025 10,396 Operating Profit 2,585 2,041 Pre-tax Profit 2,599 1,297 Income Tax Expense 699 177 Net Profit 1,900 1,120 12,025 Mn

Financial Position (Rs. Mn) Revenue (Rs.) Total Assets 21,730 18,841 Borrowings 10,486 9,325 Shareholders Funds 7,491 6,412

Information per Ordinary Share (Rs.) Earnings per Share 1.53 0.90 Dividend per Share 0.60 0.95 2,585 Mn Market Price per Share 27.50 25.80 Operating Profit (Rs.) Net Asset Value per Share 6.59 5.64

Rs. Mn 12,500

10,000 12,025 9,952

7,500 10,396 8,593 5,000 7,962 Asiri Hospital 30%

2,500 Asiri Surgical 27% Central Hospital 36% 14 15 16 17 18 Year Asiri Matara 6% Revenue Breakdown Revenue Breakdown Asiri Diagnostics 1%

Rs. 2.50

2.00

1.50 1.94

1.00 1.53

1.29 Asiri Hospital 39% 1.06 0.95

0.90 Asiri Surgical 27% 0.50 0.86 EPS 0.60 0.55 0.50 DPS Central Hospital 29% 14 15 16 17 18 Year Asiri Matara 4% EPS/DPS EBIT Breakdown Asiri Diagnostics 1% 17 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Group Certifications & Accreditations

Asiri Central Asiri Surgical Asiri Medical Asiri Hospital Hospital Hospital Laboratories

Joint Commission International (JCI) Accreditation The gold standard in global healthcare, JCI is widely accepted to be the author and evaluator of the most rigorous international standards in patient safety and quality.

RE ACC DIT ISO 22000:2005- Food Safety Management AT S I IS O N W S Demonstrates the organisation’s ability to I S O s 2 a 7 s 1 control food safety hazards in order to ensure 2 . 0 0 a 0 0 dm 0 i Sm :2005 n.ch SCE that food is safe.

RE ACC DIT ISO 14001:2015 Environmental Management AT S I IS O N W S Systems Design and implementation of a

I S O s 1 a 7 s 1 set of standards of effective Environment 4 .a 0 d 0 0 m m 01 in ES .ch SC management.

CCREDIT A AT S I IS O N W S OHSAS 18001:2007 Occupational Health & O

H S s a 7 A s 1 Safety Management Systems Certification. .a 0 S d 0 m m 18 in ES 001 .ch SC

CCREDIT A AT S I IS O N W S ISO 9001:2015 Quality Management Systems

I S O s 9 a 7 s 1 Certifications. . 0 0 a 0 0 dm 1 i Sm n.ch SCE 18 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Economic Value Added Statement

31-Mar-2018 % 31-Mar-2017 % Rs. '000 Rs. '000

Direct Economic Value Generated Turnover 3,731,903 72% 3,239,834 75% Finance Income 42,164 1% 18,496 1% Other Income 1,397,120 27% 1,048,907 24% 5,171,187 100% 4,307,237 100%

Employees Employee wages & Benefits 914,158 18% 792,934 18%

Economic Vale Distributed Operating Cost 1,910,634 37% 1,359,646 32%

Government Taxes Paid 37,551 1% 72,627 2%

Capital Providers To lenders as Interest 906,274 18% 776,819 18% To Shareholders as Dividends 682,520 13% 1,080,657 25% Currency Fluctuation - 0% - 0%

Expansion and Growth Depreciation 144,434 3% 123,210 3% Retained Earnings 575,616 11% 101,344 2% 5,171,187 100% 4,307,236 100%

Employees 17% Employees 18% Operating Cost 57% Operating Cost 32% Government 1% Government 2% Distribution of Economic Capital Providers 31% Distribution of Economic Capital Providers 43% Value Added - 2018 Expansion and Growth 14% Value Added - 2017 Expansion and Growth 5% 19 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Report Overview

Report Profile This is the 3rd integrated annual report The consolidated financial statements contained published by Asiri Hospital Holdings PLC (Asiri in this report have been audited by the Group’s Health). The contents of this integrated annual independent external auditors, Messrs Ernst & report are deemed to be useful and relevant Young Chartered Accountants and their report to our stakeholders, with due regard to our is included on page 68 of this integrated annual stakeholders’ expectations through continuous report. engagement, or that the Board believes may influence the perception or decision-making Board Responsibility of our stakeholders. The information provided The Board of Directors of Asiri Hospital Holdings aims to provide our stakeholders with a PLC acknowledges its responsibility for ensuring good understanding of the financial, social, the integrity of this integrated report. The board environmental and economic impacts of the confirms that it collectively reviewed the report’s Group to enable them to evaluate the ability of contents in conjunction with the assurance Asiri Health to create and sustain value for our reports obtained from our various internal stakeholders. and external assurance providers, including assessments on risk and internal controls. Scope, Boundary and Reporting Cycle This integrated annual report presents Accordingly, the board is of the view that this the economic, social and environmental integrated report addresses key material matters performance, as well as the financial results to its stakeholders’ decision-making. of the Group for the financial year ended 31st March 2018. The report covers all our operations Forward-looking Statements in Sri Lanka including Asiri Surgical Hospital PLC, Certain statements in this document may Asiri Medical Hospital, Asiri Central Hospital, Asiri constitute forward-looking statements. Such Hospital Matara and Asiri Laboratories. statements involve known and unknown risks, uncertainties and other important factors that Reporting Principles could cause the actual results, performance This integrated annual report was prepared in or achievements of the Group to be materially accordance with the Listing Requirements of different from the future results, performance the CSE, as well as the Companies Act No. 7 of or achievements expressed or implied by 2007. In reporting on sustainability indicators, such forward looking statements. The Group every effort has been made to align with the undertakes no obligation to update publicly or guidelines set out under the Global Reporting release any revisions to these forward-looking Initiative (GRI). statements to reflect events or circumstances after the date of this document, or to reflect the Assurance occurrence of anticipated events. Internally, the Group has adopted a combined assurance approach, where the report content is reviewed and approved by the Executive Committee, the Audit Committee and the Board. Ashok Pathirage Chairman 21 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Chairman's Message

Dear Stakeholder, I believe that achieving We undertake this, our 3rd integrated report, believing that after a year of considerable progress on all fronts, Asiri Health has made great strides in improving its financial and non-financial international accreditation performance. Hence we continue onward in on our integrated reporting journey to illustrate the for our entire portfolio of Group’s efforts in creating sustainable value for all stakeholders. My message serves to provide but a hospitals will certainly brief recap of the notable highlights for the year. give the Group a strategic Financial Performance The Group tabled a strong financial performance for 2017/18, with both revenue and profits advantage in the market reporting a solid year-on-year improvement. Revenue for the year crossed the Rs. 12 Bn to reach a and more importantly historical high of Rs. 12.02 Bn. Profits too were at an all-time high of Rs. 1.9 Bn, up by a phenomenal elevate our credentials 70% from the Rs. 1.12 Bn recorded in the previous financial year. as one of the few world- Group Strategy We updated our strategy in line with the current and expected future operating environments and class hospital chains in the in doing so intensified our focus vis-à-vis three key interconnected themes; growth, efficiency and Asian sub-continent. quality.

As always efforts to scale up operations across the Group took precedence, as we accelerated our programme to build more diversified offerings that would enable each hospital to broaden their respective revenue streams. While increasing our leverage, curative medicine has remained the key priority of our investment agenda, 2017/18-year marked a turning point where equal emphasis was 12Bn placed on preventive medicine, especially in the areas of wellness and wellbeing. The move forms Revenue for the year part of our commitment to respond effectively to the visible demographic trends in our country, in particular the ageing population and the high incidence of NCDs.

To further complement our growth plans we intensified our focus on building efficiencies, with our teams actively pursuing various productivity improvement initiatives, to help reduce cost of care, where possible, while maintaining the same high quality care delivery model. The move is also part of a broader strategy to make healthcare more affordable to the wider public.

I must also reiterate that we remain strongly focused on quality and strive to achieve high standards that set the Asiri Health brand apart from peers. We have traditionally always set ourselves higher targets than those expected by regulatory bodies or industry benchmarks. To ensure a standardised globally accepted care delivery model across all our hospitals, we’ve begun the journey towards securing the Australian Commission of Healthcare Standards (ACHS) for three of our hospitals – Asiri Surgical, Asiri Medical and Asiri Hoisptal – Matara. Asiri Central already a JCI accredited facility. I believe that achieving international accreditation for our entire portfolio of hospitals will certainly give the Group a strategic advantage in the market and more importantly elevate our credentials as one of the few world-class hospital chains in the Asian sub-continent. 22 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Chairman's Message

Ethics and Governance The Asiri Group will stay We understand that our mission to help save lives and create a safer world depends on good governance and ethical behaviour. Hence we take great pride in conducting our business with focused on maximising integrity and remain fully committed to building a culture where ethical conduct is seen as a key potential growth imperative at every level across all Asiri hospitals. Part of this commitment includes encouraging our teams to be more proactive and transparent about their work. Specific efforts in this regard were opportunities while spearheaded by your Board of Directors, who took steps to further reinforce the compliance culture providing high quality across the Group through a structured training initiative aimed at encouraging the adoption of a patient-centered care transparent incident reporting mechanism in line with globally accepted best practices. and excellent clinical Future Outlook Despite the somewhat bleak economic outlook for the country, going forward there are strong outcomes across our indications to suggest that the demand for quality medical services will only continue to grow. Amidst hospitals. this environment, the Asiri Group will stay focused on maximising potential growth opportunities while providing high quality patient-centered care and excellent clinical outcomes across our hospitals. This I believe will be crucial in strengthening our competitive position in the local healthcare industry.

Further, we realise that making our services more widespread will be the key to deepening our penetration in the market in the years to come. I believe we are well placed in this regard too, for our newest venture Asiri Hospital – Kandy, which is due to be launched early 2019. The event would not only make the Asiri Group the largest private healthcare provider in country, but more importantly give the people of the Central, North Central, Northern and Sabaragamuwa provinces access to an unprecedented level of healthcare services in the year ahead.

Appreciations To conclude, I would like to thank our panel of doctors, nursing teams and employees for their continued support. Thank you for your continuous and ongoing commitment to bring to life, the Asiri Health mission each and every day. I also wish to thank my colleagues on the board for assisting me at all times.

Finally, while thanking our shareholders for the trust and confidence placed in the Asiri Group, I reiterate our commitment to keep on surpassing your expectations in the years ahead.

Sgd. Ashok Pathirage Chairman 23 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Media Highlights Dr. Manjula Karunaratne Group Chief Executive Officer 25 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 CEO's Review

At the conclusion of another successful year, Asiri Health reported a strong all-round performance, In our quest to maintain a testament to our clearly articulated growth strategy, and the commitment of our employees and our dominance in clinical doctors to deliver high standards of clinical care to patients across all our hospitals. excellence we continued Financial Results investing to build capacity I am happy to report the Group not only met but exceeded all financial targets for 2017/18. Revenue for the year under review increased to Rs. 12.02 Bn from Rs. 10.39 Bn in 2016/17, a solid 16% year-on- to ensure that every one of year increase. Led by higher Revenues, Group profits too grew by a staggering 70%, from Rs. 1.12 Bn our hospitals is equipped in 2016/17 to Rs. 1.9 Bn in 2017/18. to offer a truly world–class A world-class portfolio healthcare proposition. It has been an exceptionally busy and exciting year for Asiri Health. We continued to experience high demand for our services, with a record number of patients frequenting our hospitals. Together the Group reported a total of close to a million patients patronising our facilities during the twelve months ending 31st March 2018. This I believe is confirmation that the facilities and quality of care we offer our patients is not just the industry-best, but rather world class.

In our quest to maintain our dominance in clinical excellence we continued investing to build 1.9Bn capacity to ensure that every one of our hospitals is equipped to offer a truly world–class healthcare Profit for the year proposition.

At Asiri Surgical Hospital (ASH) our central focus was the Asiri-AOI Cancer Centre, a project that is the result of a partnership between Asiri Health and the American Oncology Institute (AOI). Upon its completion in September 2018, the Asiri-AOI Cancer Centre will not only be Sri Lanka’s latest and most comprehensive Cancer Treatment Centre, but also would most likely be positioned as one of the top Oncology facilities in the region.

While we have traditionally focused on strengthening ASH’s capability in curative medicine, in the year under review a strategic decision was made to expand our capacity in preventive care, concentrating specifically on wellness and eldercare, two areas that I feel are becoming increasingly relevant given Sri Lanka’s current health concerns in the form of NCDs and an ageing population. At the same time we expanded our programme of wellness clinics to include a series of geriatric clinics aimed at raising public awareness regarding the issues associated with an ageing population. As part of the ongoing emphasis on geriatrics, ASH also began offering outpatient care at subsidised rates for elderly patients over the age of 60.

At Asiri Medical Hospital, the Group’s longest-serving facility, all efforts were focused on the ongoing renovation project. Phase 1, which got off the ground in the previous year was successfully concluded with the ground floor OPD consultation rooms receiving a complete facelift. Moving on to Phase 2 in the latter part of 2017, I am happy to see that good progress was made in renovating the first floor OPD consultation rooms and patient rooms, which I expect would be completed on target 26 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 CEO’s Review by March 2019. We also acquired another block In our Laboratory operation too we continued building capacity to boost our footprint and increase of land located adjacent to the hospital, which our outreach, particularly in areas emerging as high population density belts. A total of 3 new satellite at present has been developed to provide much laboratories and 12 new collection centres were opened during the year under review, bringing needed parking facilities for patients and visitors. the total network to 13 and 51 respectively as at 31st March 2018. I am also pleased to report that in recognition of our consistent commitment to quality, Asiri Laboratories secured the Silver Award at the Not forgetting to strengthen AMH’s core Quality Circle competition, the fourth consecutive year in which the laboratories segment has been the proposition as a Mother-and-child hospital, a recipient of this award presented by the National Convention on Quality and Productivity 2017. new Paediatric Respiratory Disease Centre was opened in August 2017, making it the country’s Meanwhile work on our newest and most ambitious project to date, Asiri Hospital – Kandy (AH-K) only dedicated facility for the management of remains on track, with equipment sourcing as well as staff recruitment and training activities chronic asthma and other respiratory diseases in commencing in March 2018 in anticipation of the Qtr 1-2019 launch date. children under the age of 12. With over 60% of the structural construction work including mock-up rooms completed, procuring of Meanwhile at the Group’s flagship hospital equipment commenced and recruitment for key positions having begun, I am now able to visualise Asiri Central (ACH), capacity building efforts the end result and can confidently state that AH-K is likely to be the only hospital in Sri Lanka built in were mainly directed towards augmenting the line with globally accepted green building standards. facilities at our Centres of Excellence, specifically at the Brain & Spine Centre where we invested Commitment to Quality in a range of new equipment to support our At Asiri Health, our systems and processes for quality, safety, compliance and incident management ability to perform scoliosis surgery. With this are geared to ensure that each patient who enters any Asiri Group facility receives high quality clinical new development, ACH becomes the first and care and the best possible outcomes. only private hospital in Sri Lanka equipped to perform this precision-driven procedure on a While we are extremely proud of our safety record and our reputation for high quality clinical regular basis. The ACH Brain & Spine Centre outcomes, we believe quality and safety leadership can only be sustained through the active and continued making history by becoming the first- ongoing commitment towards continuous improvement. In fact it is this belief that inspired three ever facility outside the United Kingdom to be of our hospitals – ASH, AMH and AH-M to begin working towards the ACSHI (Australian Council on appointed as an accredited examination centre Healthcare Standards International) accreditation. for the prestigious Royal College of Surgeons, UK. While acknowledging this as one of the I expect that the rigorous and challenging process needed to achieve accreditation will not only most significant achievements in ACH’s 8-year transform our operational framework on par with globally accepted best practice benchmarks, but history, I must admit that is an unmistakable also give each hospital a leading edge within their immediate peer group. Since undertaking the acknowledgement of all the hard work and effort accreditation process in mid-2017, we have made great strides in strengthening quality and safety put in over the years to pivot ACH as a world- protocols, with more initiatives due to be rolled out over the coming months in line with our mid-2019 class facility. accreditation target.

At Asiri Hospital – Matara (AH-M) now in its 11th While I must admit that accreditation certainly adds to our credentials, we are not looking to be full year of operation, a specialised Neurology defined solely by it. Crucially, we also want to be recognised as the most-trusted and truly patient- unit was commissioned, as part of our strategy centric hospital brand in Sri Lanka. Our patient-centric attitude cascades through to all our activities to place AH-M as the only fully equipped private to ensure we put the patient at the center of everything we do. Echoing this commitment, a hospital serving the people of the Southern, comprehensive digital data capture mechanism was rolled out with effect from September 2017 Sabaragamuwa and Uva Provinces of the to determine ongoing basis, patient satisfaction levels with regard to clinical outcomes as well as country. administrative procedures. 27 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 CEO’s Review

Recognising Our People programme in partnership with the University of Aberdeen. Approved by General Medical Council People are a crucial part of our DNA for it goes of UK, the degree programme would enable medical students to complete the first three pre-clinical without saying that the success of our business years in Aberdeen followed by two clinical years at our hospitals. Not only would this be a further relies heavily on the knowledge, skills, empathy endorsement of our high clinical standards, it also supports our position as the only private teaching and dedication of our employees. hospital in the country. However, what I consider to be most important is that when it is launched in 2020, the programme would make international medical education more affordable to Sri Lankan However with Sri Lanka’s healthcare industry students and reduce significantly the drain on the nation’s foreign exchange. facing a critical shortage in skilled labour, at Asiri Health we are now exploring a variety of bold I do look forward to these events with a great deal of anticipation, as they constitute significant new strategies to attract, retain and develop the achievements that reinforce our world-class status. best in-class talent that exemplifies our brand promise. At the same time we will focus on finding solutions for the current and future healthcare challenges facing our nation, most notable among them the ageing population and the rise of NCDs. As a Service to the Community leading healthcare service provider in Sri Lanka, these are areas that Asiri Health will continue to Service to the community is one of our core address going forward. values. Although our proposition is to offer paid healthcare, Asiri Health has a dedicated Appreciations community service programme focused In conclusion, I wish to thank my colleagues on the Board for their guidance and enthusiastic on providing free healthcare facilities and participation in all board matters. I also take this opportunity to thank our panel of esteemed doctors, healthcare education to uplift the quality of life of nurses and employees for their commitment towards maintaining the high standards of clinical care the community. patients have come to expect from Asiri.

Our flagship community effort is the free-heart I also wish to thank the Group’s strategic partners and shareholders, for their support over the years. surgery initiative, which since its launch in 2011 I look forward to working together as Asiri Health enters a new and exciting growth phase in the has helped 146 underprivileged children to coming years. receive free surgery and aftercare at the Asiri Surgical Heart Centre. The Healthcare education pillar meanwhile is designed to raise community Sgd. awareness on current health topics including Dr. Manjula Karunaratne NCDs, wellness etc. Group Chief Executive Officer

The Next Steps The next few months are likely to be a time of heightened activity for the Group as we prepare for the launch of the Asiri-AOI Cancer Centre in September 2018 followed by the unveiling of Asiri Hospital Kandy in the first quarter of 2019, not to mention the ACHSI accreditation later that same year.

We are also working on a collaboration programme to facilitate an MBBS degree 28 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Healthcare in Sri Lanka

Overview mental and spiritual development”, Sri Lanka has succeeded in achieving one of the most effective Sri Lanka boasts some of the best quality healthcare systems among developing nations. In testimony to this, WHO indicators pertaining to healthcare in South Asia at surprisingly low maternal health and infant health show Sri Lanka to be well ahead of other developing nations in cost. The achievement of Sri Lanka’s healthcare the Asian region. The improvement of these indicators is predominantly attributed to the Maternal sector is mainly driven by its effective public and Child Care Programme implemented nationally as an integral component of the state healthcare delivery system, which provides free treatment system. Similarly, the current infant mortality rate has been achieved thanks to the widely accessible to all citizens, inclusive of all preventative care preventive and primary healthcare strategies including the treatment of minor infections. and most inpatient treatment. The provision of public health service in Sri Lanka takes place Notably Sri Lanka has successfully eradicated smallpox and polio through its widespread Child at the central, provincial, district and divisional Immunisation programme, and has brought under control several communicable diseases such as levels, with most people having access to some malaria. form of public healthcare facility within a 2 km radius of their homes. Ongoing Challenges Despite its many successes, Sri Lanka continues to face ever-more challenges. In recent times The private sector has participated in the the country has been plagued by outbreaks of several communicable diseases, including high healthcare industry since the 1980s when prevalence and a record number of deaths related to dengue. In 2017, Dengue prevalence increased government-employed doctors were allowed by 237.4% compared to the preceding year, with 186,101 registered Dengue cases, translating to have their own private institution to provide into 868 cases per 100,000 of the population. The fatality rate related to Dengue (i.e. deaths as a consultation and treatment. Since then the health percentage of total number of Dengue cases reported for the period) was 0.24% during 2017, higher care in the private sector has grown rapidly than the 0.18% recorded in the preceding year. and today, plays an important role in offering advanced healthcare facilities at a relatively low- Another worrying health trend appears to be emerging, with the country’s disease burden shifting cost compared to other countries in the region. significantly towards non-communicable diseases (NCDs). Over time infectious diseases have declined in prevalence while NCDs in particular have been rising due to the ageing population, According to the Demographic and Health urbanisation, changes to a more sedentary and unhealthy lifestyles and associated risk factors. One Survey recently conducted by the Department out of three people have high blood pressure, while one in three adults are either overweight or obese of Census and Statistics, 55% - 60% of and one in five is diabetic. In fact, NCDs have become the leading cause of death, accounting for three households receive services from private and in every four deaths in Sri Lanka. According to available statistics each year, over 100,000 Sri Lankans government hospitals respectively, in the form die from NCDs, such as heart disease, lung disease, stroke, cancer and diabetes. of out-patient treatment indicating the notable importance of private sector healthcare. Sri Lanka’s recent public health achievements demonstrate that the country is well placed to combat communicable diseases and provide inspiration for other countries who continue to struggle to Over the years, Sri Lanka’s healthcare system eliminate vector borne and neglected tropical diseases. has demonstrated a consistent improvement thanks to the commitment by the government In the long-term the country’s healthcare system would also be required to evolve in order to address and the private sector to invest in building the present day challenges caused by economic, epidemiological, demographic and technological capacity in all spheres of healthcare. transitions.

Sri Lanka’s Healthcare Track Record Sources: The government has done well to maintain a ee Annual Health Statistics 2016 publication released by the Medical Statistics Unit of the Ministry of low-cost healthcare system with good quality Health, Nutrition and Indigenous Medicine treatment, enabling Sri Lanka’s healthcare ee Commonwealth Health – Sri Lanka (website) system to maintain an impressive track record. ee Joint publication by the WHO and the Ministry of Health, Nutrition and Indigenous Medicine Spearheaded by the vision “A healthier ee WHO Sri Lanka Annual Report 2016 nation that contributes to its economic, social, ee CBSL Annual Report 2017 29 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Operations Review

Asiri Medical Hospital Performance Summary Asiri Medical Hospital (AMH) ended the year on a high note, marked by consistent performance across all fronts. Revenue indicators suggest a 15% growth from Rs. 3.2 Bn in the previous year to Rs. 3.7 Bn in the year under review, indeed a commendable result given the disruptions caused by AMH’s core Mother-and- the ongoing phase 2 of the hospital renovation project. Baby unit too, tabled Marking its first full year following its relocation under phase 1 of the renovation project, the higher revenues. The hospital Pharmacy reported a solid performance with revenues showing a significant year-on-year improvement notwithstanding the government-imposed price control on 30 essential drugs. unit continued to attract large numbers, with the AMH’s core Mother-and-Baby unit too, tabled higher revenues. The unit continued to attract large numbers, with the antenatal programme launched in the previous year proving to be a big draw. antenatal programme launched in the previous Admissions at AMH peaked in the first two quarters following the Dengue outbreak during May – August 2017, with bed occupancy reaching maximum levels before settling at an average of 60% for year proving to be a big the rest of the year. draw. 30 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Operations Review

The Diabetes Centre opened in the previous year also yielded good results, thanks to a strong The hospital also began demand for the facilities available at the Centre for screening of non-communicable diseases. working towards the From a cost perspective, AMH too was hit by the severe cost escalation in imported consumables ACHSI (Australian following the Rupee depreciation in the latter half of 2017. Furthermore, having the most senior Council on Healthcare medical team in the Group, AMH continues to face higher fixed costs, all of which meant EBIT only managed to stay on par with the previous year. Standards International) accreditation, with the Operational Developments With cost management an absolute priority, several cost saving initiatives were launched wherever initial gap analysis study possible and practical, including the amalgamation of certain non-core activities to benefit from in progress as 31st March Group synergies.

2018. As part of the commitment to ongoing improvement, the recertification of the ISO 22000 (Food Safety Management Systems) was completed for the AMH kitchens. The hospital also began working towards the ACHSI (Australian Council on Healthcare Standards International) accreditation, with the initial gap analysis study in progress as 31st March 2018.

Capacity Building Initiatives The main capacity building initiative for this year too was the massive 3-year renovation project undertaken in the previous financial year. Phase 1, which involved completely renovating the ground floor OPD consultation rooms concluded in mid-2017. Phase 2, which commenced in the latter part of 2017 saw the commissioning of a much-needed elevator, while the renovation of the first floor OPD consultation rooms as well as the patient rooms are ongoing. Moreover, to facilitate AMH’s long-term capacity expansion programme, another 66 perch block of land was acquired. The property located adjacent to the East end of the hospital was developed as a car park.

With the Diabetes Centre continuing to attract more patients and endocrinologists who appreciate the holistic services extended to diabetics facilities at the centre, were further enhanced during the year. The chronic wound management and diabetic foot care services provided by the centre were further strengthened, while the centre also began undertaking to provide customised footwear for diabetic patients based on their unique needs.

Meanwhile to strengthen AMH’s profile as a specialised mother-and-baby hospital, a paediatric respiratory disease centre was opened to facilitate the long-term management of chronic asthma and other respiratory diseases in children under the age of 12. 31 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Operations Review

Asiri Surgical Hospital Performance Summary Concluding a successful year, Asiri Surgical Hospital (ASH) reported notable improvements in all KPI’s. Revenue for the year under review touched Rs. 3.2 Bn, up by 14% from the Rs. 2.8 Bn registered in the previous financial year.

The largest contribution The largest contribution to the revenue mix came from the Cardiac unit, where a year-on-year growth to the revenue mix of 19% was reported, supported by the cardiologists island wide who used our cardiac catherisation laboratories, coronary care unit and the cardiothoracic intensive care teams who work hard to came from the Cardiac bring out best clinical outcomes for our patients and the Cardiac clinics conducted to raise public unit, where a year-on- awareness regarding the importance of early detection of cardiac issues. year growth of 19% was Other major disciplines including; Urology, Radiology and Orthopedics as well as General Surgery reported, supported by also reported higher revenues and thereby increased their contributions to the total revenue mix for the year. With these major surgical specialties reporting higher numbers, admissions increased by the cardiologists island 11% year-on-year, while bed occupancy levels averaged 63% throughout the year. wide who used our cardiac catherisation laboratories. 32 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Operations Review

Healthy topline results helped boost ASH’s Gross due to be completed in August 2018, which would enable ASH to secure the OHSAS recertification Profits, where a strong year-on-year increase was for a further period of three years. reported over the previous year, notwithstanding the rising cost of imported consumables on the Capacity Building Initiatives back of sharp depreciation in the Rupee from Continuing with the key underlying strategy, capacity building initiatives were carried out with the about September 2017. intention of strengthening ASH’s position as a surgical hospital.

Operational Developments The major development in this regard, was the ongoing effort to set up a fully fledged Cancer Faced with the unforeseen escalation in costs, Treatment Centre in partnership with the American Oncology Institute (AOI). With the initial the main operational priority shifted towards cost groundwork completed in the previous year, construction of the new Asiri-AOI Cancer Centre management, prompting increased emphasis on commenced in February 2018. The first phase of the construction of a bunker to house the Linear streamlining the procurement mechanism and Accelerator for radiotherapy treatment also began in the early part of 2018 and is due to be operational efficiency. completed ahead of the launch date in September 2018. It is expected that the Asiri-AOI Cancer Centre fitted with the latest equipment including the country’s most advanced linear accelerator and At the same time in an attempt to exercise the Brachytherapy machine for advanced treatment of specific forms of cancer, will be positioned greater control over costs, the market-driven among the top Cancer Treatment Centres in the sub-continent. pricing strategy rolled out in the previous year was further refined. Other noteworthy capacity building efforts for the year included the investment in a fully equipped ENT console with the latest diagnostic equipment, surgical capabilities and a comprehensive Meanwhile in the interest of promoting greater treatment unit capable of handling a range of high-end precision-driven ENT surgeries. And to transparency, ASH expanded its Bill Estimate maximise ASH’s leverage in specialised medical treatments, a fully-fledged 03-bed dialysis centre was programme to cover all surgical procedures, commissioned in the year under review. giving the patient greater clarity regarding the ultimate cost associated with a specific treatment The wound care centre was expanded with the most modern treatment facilities consisting of 5 or surgical procedure. treatment cubicles to cater to chronic wounds, varicose veins, stoma care, plaster casts and splints in a coordinated service and follow up. Other noteworthy operational developments included the recertification of the ISO 22000 Strong emphasis was placed on building capacity in other disciplines as well, especially in the sphere (Food Safety Management Systems) certification of preventive medicine. Several important steps were taken to develop the wellness centre suite for the ASH kitchen. ASH also made good targeting specific segments of the market. In this regard the Healthy Teen Outreach Programme progress in its efforts to work towards the ACSHI was launched to create awareness on psychological and stress related issues faced by modern-day (Australian Council on Healthcare Standards teens. Group sessions of mindfulness and memory training activities for young children organised International) accreditation. Having kick started with the clinical psychologist has gained popularity and has filled a void in the country. A range of the process in the previous financial year, structured corporate wellness packages were also rolled out to address the growing incidence of the initial gap analysis study was completed NCDs in over-40s. in October 2017, enabling ASH to proceed with necessary qualifying action to complete The eldercare centre was further expanded with a series of geriatric clinics being held to raise the accreditation process by mid-2019. The public awareness, regular outpatient care at a subsidised rate for those over 60 years and short OHSAS 18001 (Occupational Health and term residential care to optimise health conditions of the elderly. A a new palliative care team was Safety Management Systems) audit was also in formulated to ensue better outcomes for end stage patients with cancer, organ failure and other progress at the end of the financial year and is terminal illnesses. 33 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Operations Review

Asiri Central Hospital Performance Summary Delivering yet another stellar performance, Asiri Central Hospitals (ACH) tabled revenue of Rs. 4.4Bn up by 17% from Rs. 3.8Bn in the previous year. The impressive result was driven by a 43% year-on- year increase in Cardiac Revenue, where an average of 269 Cath Lab procedures were performed in the year under review compared to 181 in 2016/17. The number of Cardiac surgeries also increased The Brain & Spine from an average of 22 per month in the previous year to a monthly average of 26 in the current year. Centre too continued to The Brain & Spine Centre too continued to perform well. Averaging approximately 90 surgeries for the perform well. Averaging 2017/18 financial year, enabling the ACH Brain & Spine Centre to maintain the record for the highest approximately 90 number of annual surgeries reported in the private sector. surgeries for the 2017/18 The Bone Marrow Transplant (BMT) unit reported a 52% year-on-year growth in revenue, primarily financial year, enabling thanks to the recognition the unit continues to receive due to the high success rate in clinical outcomes. the ACH Brain & Spine Another segment that increased its contribution to the revenue mix was the ACH pharmacy. Centre maintain the record Overall bed-occupancy levels held firm at an average of 60% for the year, after peaking at 63% in the first for the highest number of two quarters, mainly on account of Dengue-related admissions. Consultation numbers at ACH averaged annual surgeries reported 888 per day, a considerable improvement from the 826 daily average registered in the previous year. in the private sector. 34 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Operations Review

This is believed to be the result of the strategic decision to encourage many leading specialists to include While stringent cost Sunday consultation sessions as part of their weekly channeling roster at ACH. Welcomed by the market, management was seen as the move has been tremendously successful in boosting the consultation numbers for the year. an important area of focus, Improved topline results coupled with strict cost control measures saw ACH’s profits for the year register a 65% increase over the previous year. This is seen as a considerable achievement, the major operational particularly given the added cost burden brought on by the deprecation of the Rupee. priority for ACH was to Operational Developments strengthen its reputation While stringent cost management was seen as an important area of focus, the major operational for excellence across all priority for ACH was to strengthen its reputation for excellence across all spheres of the medical field. spheres of the medical This was alongside ongoing efforts to improve efficiency and productivity across operational models. field. Special Achievements In what is perhaps the most significant endorsement of the unit’s standing, as a Centre of Excellence, the ACH Brain & Spine Centre became the first-ever facility outside the UK to be selected to host the clinical component of the FRCS examination in Neurosurgery. Made possible by a collaboration between the Joint Surgical Colleges Fellowship Examination (JSCFE) Board and the Joint Colleges Intercollegiate Examination (JCIE) Board of the Royal Colleges of Surgeons in the UK and Asiri Health, this prestigious programme was inaugurated in Colombo in February 2018, where forty-four candidates from different parts of the world sat for the examination with a contingent of eighteen Senior Consultant Neurosurgeons arriving from the UK to conduct the examinations.

In yet another notable accolade, the ACH Bone Marrow Transplant Unit was selected by the Post Graduate Institute of Medicine - University of Colombo, as an approved training facility for medical postgraduate trainees in disciplines of clinical hematology and bone marrow transplantation.

Capacity Building Initiatives As always, capacity building initiatives were aimed at strengthening ACH’s position as the premier multi- disciplinary hospital in Sri Lanka. Accordingly, investments for the year focused on building capacity in a number of high-profile disciplines, namely Neurology and Oncology. In related developments, the Asiri Breast Care Centre was launched in January 2018, bringing together a Multi-Disciplinary Team of doctors and medical professionals to offer end-to-end care for women who suffer from any breast related issues. Meanwhile as part of the broader objective to promote early detection, the Unit began running free consultation clinics twice a week and also offering discounted screening packages to encourage women to take the necessary initiatives for early detection and treatment. This is seen as a timely move, especially with Breast Cancer becoming the commonest form of Cancer among females in Sri Lanka and the second most widespread Cancer among the country’s entire population.

Expanding the scope of the Brain & Spine Centre, investments were made in the latest range of equipment to enable ACH to perform scoliosis surgery - a precision-driven procedure, which until now was rarely performed in Sri Lanka. 35 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Operations Review

Asiri Laboratories Performance Summary Asiri Laboratories tabled a strong financial performance to close the financial year ended 31st March 2018 on a high note. Significantly higher revenues were reported in the year under review, largely as a result of the Dengue epidemic, while other indicators for the year, such as the number of tests also The laboratories segment showed considerable improvement. The laboratories segment reported an average of 11,500 tests being conducted per day, with the total number of patients served across the network during the year reported an average hitting 1.3 Mn, up from 1.2 Mn in the previous year. of 11,500 tests being Despite strong topline growth, profitability of the laboratories segment was affected by two main conducted per day, factors; the ceiling price imposed by the government on two of the leading Dengue tests and also the with the total number of substantially higher overheads due to the unprecedented increase in volumes, both of which led to the dilution of profitability compared to previous years. patients served across the network during the year Operational Developments Operationally, Asiri Laboratories made steady progress on several fronts. The product suite was hitting 1.3 Mn, up from expanded with the introduction of 19 new tests, among them the liquid biopsy for early detection of 1.2 Mn in the previous Cancer cells, Mumps & Measles Antibody, MMR Panel, NTx (Collagen cros-linked N-Telopetidute) and Immunoglobulin subclasses, are a few to be launched in Sri Lanka for the first time. year. 36 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Operations Review

The strong emphasis on quality continued Meanwhile to mark the opening of each new laboratory or centre, a “Wellness Week” was held to dominate the operational agenda for the in key towns and cities surrounding each new location with the aim of raising awareness among year. In this context, the ISO 15189:2012 communities in the area regarding the services offered by Asiri Laboratories. Participants at each accreditation for Clinical / Medical Laboratories wellness programme were also offered free health screening facilities, an effort that helped reach out was renewed for Asiri Laboratories, while the to over 6,000 people over the course of the year. ISO 9001:2015 Quality Management Standards recertification process was successfully Asiri Laboratories and Collection Centres completed at several centres and laboratories Hospital Laboratories across the network. Satellite Laboratories Jaffna Asiri Collection Centres In testimony to its ongoing commitment to quality, Asiri Laboratory Services received the Silver Award at the Quality Circle competition conducted by the National Convention on Quality and Productivity 2017. This is the fourth consecutive year in which the laboratories segment has been the recipient of this award. The award is noteworthy, in that it is presented annually in recognition to organisations demonstrating year-on-year achievements in Anuradhapura quality. Kada Panaha

Furthermore Asiri Laboratory - Anuradhapura was the recipient of the Suwa Wishishtathama award, presented by the North Central Province Gampaha Battittcaloa Private Health Services Regulatory Council for Marawila Kurunegala Wattala Kadawatha Matale the best Laboratory 2017. Mattakkuliya Kuliyapitiya Akurana Kotahena Makola Kegalle Kiribathgoda Katugastota Wellampitiya Avissawella Nittambuwa Bogambara Peradeniya Kandy Athurugiriya Negombo Pilimatalawa Capacity Building Initiatives Pelawatta Kaduwela Gampola Wellawatta Ja-ela IDH Malabe Ragama Nawalapitiya The key thrust in this regard was to further Pitakotte Homagama Maharagama Asiri Central Hospital Kottawa strengthen Asiri’s position as the #1 private Dehiwala Nugegoda Asiri Medical Hospital Rathmalana Pannipitiya Badulla laboratory service in the country . As a priority, this Piliyandala Asiri Surgical Hospital Moratuwa entailed widening the island-wide lab footprint, Horana Kalubowila Panadura Bandarawela which led to a total of 3 new satellite laboratories and 12 new collection centres to be opened Kalutara during the year under review, bringing the total Beruwala Embilipitiya network to 13 and 51 respectively as at 31st March 2018. At the same time, a new initiative to Tangalle create more visibility for centres and laboratories Asiri Hospital Matara was also launched during the year, where the - Uyanwatta visual appeal of the existing logo was further enhanced to reinforce the Asiri brand identity. 37 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Operations Review

Asiri Hospital - Matara Performance Summary Completing its 11th year in operation, Asiri Hospital – Matara (AH-M) reported a satisfactory performance, with revenue growing by 13% from Rs. 665 Mn in 2016/17 to Rs. 751 Mn for the year under review. Specialties such as Orthopaedics, General Surgery, Obstetrics & Gynaecology and Specialties such as Paediatrics reported growth, as did the hospital outpatient department. Orthopaedics, General The bed occupancy of the hospital varied during the year with the dengue epidemic in the first 2 quarters leading to higher occupancy and later dipping to its lowest following the floods in the Surgery, Obstetrics 3rd quarter. The overall bed occupancy for the year settled at 53% as a result of these fluctuations. & Gynaecology and Moreover, less availability of specialist doctors during the weekend contributes to the low occupancy Paediatrics reported of the hospital during the weekend. growth, as did the hospital Despite positive revenue indicators, AH-M too had to contend with a sharp cost escalation following the Rupee depreciation in September 2017, which brought undue pressure on the bottom line for outpatient department. 2017/18.

Operational Developments Proactive efforts to refine the operational cost structures of a number of key functions at AH-M saw a strong emphasis on streamlining procurement and improving efficiency of the pharmacy.

In parallel, the ACHSI gap analysis was also concluded, with appropriate corrective action being initiated within the year itself. In this context, additional resources were allocated to develop quality and safety systems, with leadership teams being entrusted with a series of key deliverables.

Capacity Building Initiatives Notable capacity building initiatives for the year included the launch of the Sleep Apnea Laboratory, a move that has generated considerable public interest and resulted in a strong demand for the services provided in this area. The commissioning of the CT Scanning machine at the beginning of the fiscal year too has added significantly to business volume.

Initial efforts aimed at setting up a specialised Neuro unit saw investments being made in a new EMG machine for the diagnosis of neurological and neuromuscular problems. A Neurology clinic was also held to raise awareness among the general public in the Southern province. Held jointly with Asiri Central Hospital, the Neurology clinic saw the participation of several eminent neurologists and neuro surgeons.

The appointment of an endocrinologist to the southern province also broadens the specialty services offered by AH-M, particularly to address the threat of NCDs, while the mother-and baby programme was re-launched as part of a broader effort to standardise the services offered through baby delivery programmes across Asiri Health. 38 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Operations Review

Asiri Hospital - Kandy Work on Asiri Hospital – Kandy (AH-K), the Group’s newest venture reached its third phase in the year under review. With over 60% of construction work being completed, procuring of equipment commenced by end-January 2018, with equipment for diagnostic radiology and imaging and out patients department services being prioritised.

Following the completion The focus on cadre planning and staff recruitment was also intensified, while efforts to build a patient of the mock up rooms, a database were initiated in March 2018. pre-launch walk through Meanwhile following the completion of the mock up rooms, a pre-launch walk through the site is the site is scheduled scheduled to promote the facility among several key specialist doctors in the country. to promote the facility With all activities progressing smoothly, AH-K remains on track for its scheduled launch in early 2019. among several key specialist doctors in the country.

Schematic Proposal - Asiri Hospital, Kandy 39 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Group Sustainability Report

Stakeholder Engagement and Materiality Determination Stakeholder Engagement marks the starting point of our journey towards becoming a more sustainable business economically, socially and environmentally. We find that interacting with our stakeholders helps us understand their most pressing concerns and incorporate these material aspects into our strategic plans. We are thus able to overcome challenges and build trust in our brand.

To maximise the value generated through our Stakeholder Engagement Process, we have established a set of Group-wide policy guidelines to govern our interactions with all key stakeholder groups.

Stakeholder Group Engagement Methodology Key Expectations Patients ee One-on-one interactions with doctors, nursing staff ee Ease of admission, billing and discharge procedures and other medical personnel ee Quality nursing care ee Customer feedback survey ee Internationally benchmarked clinical best practice that ee Corporate website promote quality care and improved patient outcomes ee Low infection rates and medication errors ee Latest state-of-the-art technology and clinical facilities ee Access to multi-disciplinary health services ee Positive hospital experience

Employees ee Open door policy ee Recognition and reward for quality performance ee Performance appraisal discussion ee Training and personnel development ee Grievance handling mechanism ee Equal opportunity in non-discriminatory culture ee Regular divisional staff meetings ee Competitive remuneration and benefits package ee Staff newsletter ee Structured ethical working environment ee Whistle blower policy ee Access to a wellness programme ee Work environment focused on safety and minimising of occupational risks ee Employee engagement

Doctors ee Regular one-on-one open communication with ee High-quality support with regard to nursing, hospital facilities, doctors technology and equipment ee Participation in medical advisory committees ee Access to multi-disciplinary health services ee CME programmes ee Participation in medical advisory committees ee Access to quality consulting rooms 40 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Group Sustainability Report

Stakeholder Group Engagement Methodology Key Expectations Suppliers ee Ongoing interaction with suppliers in reviewing and ee A reputation for ethics and fairness in dealings with suppliers renewing contracts and procurement initiatives ee Negotiations with suppliers built on mutual respect and fair ee Regular meetings and negotiations with strategic pricing structure supply partners ee Transparent tender process

Government ee Ongoing interaction with the Ministry of Health at an ee Compliance with regulations executive level ee Assisting in the development of appropriate healthcare ee Ongoing communication on private/public sector regulation issues ee Access to affordable healthcare ee Participation in government forums and priority projects

Shareholders ee Annual general meeting ee Sustained growth and financial stability ee Corporate website ee Strong corporate and clinical governance to safeguard business ee Clear and transparent communication of the Group’s strategy and results ee Business outreach ee Market share ee Environmental sustainability

Sustainability Framework The Group Sustainability Framework serves Commitment to Quality as a catalyst in positioning Asiri Health to and Patient Safety achieve sustainability leadership through the delivery of industry-best value for our patients, employees, local communities and Care for the Asiri Health Sustainability Focus on our People the environment. Environment Framework

Support Communities 41 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Group Sustainability Report

Commitment to Quality and Patient Safety At Asiri Health, we are committed to continuously improve the quality of clinical care provided to patients and in doing so seek to foster a quality culture where all employees are held accountable for the delivery of safe, high quality care for our patients.

Across the Group the commitment to quality and patient safety, is driven by three pillars;

Quality and Safety Framework The Asiri Health Quality and Safety Framework serves as a formal mechanism that facilitates the implementation of Group-wide quality and patient safety initiatives and to promote responsibility and teamwork. It also provides guidelines for evaluating results, documenting, reporting and communicating quality gaps by encouraging a blame-free reporting culture to identify areas that require improvement.

Asiri Group Quality and Safety Framework

Quality Assurance Quality and Safety Governance ee Quality and patient safety steering ee Environment, health and safety committee department ee Annual quality improvement plan ee Facilities management committee ee Clinical Performance Indicator dash board ee Hospital radiation safety committee ee Quality improvement related mandatory ee Laboratory safety officer training programme ee Department-wide safety teams ee Quality improvement projects

Continuous Improvement Safety Culture ee Quality indicator plans for each ee Risk management frame work including department clinical and non clinical risks ee Quality improvement projects ee Incident management ee Ongoing engagement with Medical ee Feedback review committee Officer of Health (MOH) and Public Health ee Community forum Inspector (PHI) ee Rapid response teams and resuscitation committee for deteriorating patient management 42 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Group Sustainability Report

Accreditation We believe accreditation provides a benchmark to measure our performance against global best practices for healthcare service providers, thereby creating a platform to integrate the latest healthcare standards as part of our continuous improvement programmes.

Through its accreditation efforts, the Asiri Group strives to maintain leadership in raising the standard of clinical quality across the local healthcare industry.

Asiri Group Accreditation Record

Accreditation/Certification Status Asiri Central Joint Commission International (JCI) Accredited since September 2016 Hospital ISO 9001:2015 - Quality Management Systems Certifications Certified since November 2012 ISO 22000:2005 - Food Safety Management Certified since July 2012

ISO 14001:2015 - Environment Management System Certified since November 2012

OHSAS 18001:2007 - Occupational Health & Safety Assessment Series Certified since November 2012

Asiri Surgical Australian Council on Healthcare Standards International (ACHSI) In-progress. Hospital Due to be completed by mid-2019 ISO 22000:2005 - Food Safety Management Certified since March 2013 ISO 14001:2004 - Environment Management System ISO 14001:2004 Certified since November 2011 Recertification with new version of ISO 14001:2015 due to be completed by August 2018 OHSAS 18001:2007 - Occupational Health & Safety Assessment Series Certified since November 2012, recertification due to be completed by August 2018 Asiri Medical Australian Council on Healthcare Standards International (ACHSI) In-progress. Hospital Due to be completed by mid-2019 ISO 22000:2005 - Food Safety Management Certified since June 2017 ISO 14001:2004 - Environment Management System ISO 14001:2004 Certified since November 2011 Recertification with new version of ISO 14001:2015 due to be completed by November 2018 OHSAS 18001:2007 - Occupational Health & Safety Assessment Series In-progress. Due to be completed by November 2018 Asiri Hospital - Australian Council on Healthcare Standards International (ACHSI) In-progress. Matara Due to be completed by mid-2019 Asiri ISO 15189:2012 for Clinical / Medical Laboratories Accredited since mid-2019 Laboratories ISO 14001:2015 - Environment Management System Certified since September 2017 ISO 9001:2015 - Quality Management System Certified Since May 2018 43 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Group Sustainability Report

Patient Feedback streamlined to increase productivity and improve efficiency with the aim of cutting patient discharge We see Patient feedback as a key enabler in time in half, while a new digital tracking system was introduced to monitor and highlight lag times at maintaining our commitment to quality and each stage of the discharge process. Furthermore having determined the pharmacy procedure to patient safety. Effective and ongoing patient be excessively time consuming, a new system was designed with several interconnected processes feedback helps to strengthen, personalise and being automated to expedite the data capture and thereby enhance the overall quality of the discharge enhance the relationship between patients and process. our healthcare teams. Moreover, complaints and compliments offer a unique opportunity to Focus on Our People evaluate the appropriateness of our care delivery As a leading private healthcare service provider in the country, our people have a profound impact on model and identify areas for improvement. our business. Our aim is to support and safeguard these extraordinary people, and do so by focusing on four key themes; The standard patient feedback mechanism in place across the Group was further enhanced in Responsible People Management September 2017. The existing feedback form was We realise that central to our mission to provide high quality healthcare is the ability to have the revised to cover a broader range of areas such as best talent in the industry. At an industry-level we continue to be challenged by the dearth in skilled pain management, cost of treatment, etc., while labour. However to overcome these challenges and attract and retain the best in-class talent, we new digital tablets were provided in addition to the offer competitive remuneration above-and-beyond industry benchmarks and in compliance with all paper-based forms to make it more convenient for national regulations. Regular reviews are conducted to assess the effectiveness of our remuneration patients to provide their feedback. Following the policies and to determine their relevance to current industry norms. introduction of a digital feedback tool, a marked increase was seen in the number of patients Staff Composition as at March 2018 providing feedback. Company Managerial Consultants Medical & Operational Admin Total Staff Para-medical Count At a strategic level, a dedicated Feedback Review Asiri Hospital 55 - 612 712 99 1,478 Committee was set up, headed by the Director Holdings PLC Operations. Consisting of a cross-functional team, the Feedback Review Committee is tasked with Asiri Surgical 14 1 401 497 46 959 analysing feedback information, identifying trends Hospital PLC in complaints, etc. and implementing necessary Asiri-AOI Cancer - - - - 1 1 corrective action to prevent the recurrence of Centre (Pvt) Ltd negative feedback. Several new safety initiatives Central Hospital 21 8 480 675 30 1,214 were implemented within the year based on Ltd. patient feedback, among them the floor-level Asiri Hospital 4 - 134 284 39 461 safety signage, directional signage, amenity kit, Matara (Pvt) Ltd. the car park emergency call-in system and most notably the Bill Estimate. Asiri Diagnostic 1 - 11 14 3 29 Services (Pvt) Ltd. To address the complaints regarding excessive Asiri Kandy 1 - - - 1 2 discharge time, an in-depth quality assessment Hospital (Pvt) Ltd. study was carried out during the year to identify Total 96 9 1,638 2,182 219 4,144 potential choke points. Based on these findings, Percentage 2.32% 0.22% 39.53% 52.65% 5.28% a number of administrative processes were 44 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Group Sustainability Report

Gender Breakdown – as at March 2018 Taking our diversity policy a step further by Hospital Male Female Total recognising the diverse talents of our employees through various platforms that allow them to Asiri Hospital Holdings PLC 487 991 1,478 showcase their unique abilities. Asiri Surgical Hospital PLC 358 601 959 Training and Development Asiri-AOI Cancer Centre (Pvt) Ltd 1 1 We invest in our people by providing them with Central Hospital Ltd. 417 797 1,214 the requisite training needed to perform their job roles as well as to support their personal career Asiri Hospital Matara (Pvt) Ltd. 126 335 461 growth. Asiri Diagnostic Services (Pvt) Ltd. 16 13 29 At Asiri Health, training begins at the point of Asiri Kandy Hospital (Pvt) Ltd 1 1 2 recruitment, with all new recruits enrolled in the Total 1,406 2,738 4,144 Group Induction programme, to help them learn the demands of the job, integrate into the Group At present, in addition to their salary, all Asiri Health employees are entitled to a comprehensive range culture and values, as well as understand our of benefits that include flexible working hours, subsidised accommodation, staff meals, staff discounts quality and safety standards. offered by Softlogic Group companies, comprehensive Life and Personal Accident Cover medical insurance and child care facilities, etc. The Group maintains a total of 15 hostels for all employees Thereafter based on the annual training needs who request this facility. analysis, we provide targeted training and development activities to support our people to Moreover our strong performance culture ensures our people remain aligned with our business improve their skills (Clinical and non-clinical) and strategy and values. At the end of each financial year all employees receive a formal performance fulfill the Group’s mission to deliver exceptional review to determine their performance against pre-agreed KPIs and ensure they are suitably rewarded patient care and customer service. for their contribution to the Group’s operating, strategic and financial performance for the particular year under review. Number of Total Programmes Number of Creating a Robust and Inclusive Workplace Held Man Days At Asiri Health, we believe that inclusion promotes diversity of thought, new ideas and a range of perspectives, allowing us to continually improve the care and service we deliver. As such we strive Clinical 441 1,924 to create an inclusive workplace that has the capacity to attract and retain a talented and diverse Trainings workforce of clinical and non-clinical staff. Non Clinical 1,002 5,612 We are an equal opportunity employer and adhere to a non-discriminatory policy that ensures we Trainings do not discriminate against sex, religious beliefs, marital status or any other status protected by law. Total 1,443 7,536 These principles are applied throughout the employment cycle, covering recruitment, retention, promotion and eventual exit. Given the nature of our business, on-the-job Our commitment to diversity is led by a strong focus on gender equality. In this regard we promote training is a crucial component of our talent equal pay between men and women and have further implemented a wide range of supportive development model, especially for nursing staff. policies and practices to help achieve gender equality in the workplace. Nurses are the largest professional group in our 45 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Group Sustainability Report workforce, and we support the professional of preventive programmes for Radiation Safety, Laboratory Safety, and Hazardous Material development of our nurses through on-the-job Management, etc. experiential learning, in-house programmes, external training and overseas training The incident command centre records work-related accidents and incidents, which are further opportunities for selected talent in the Group. investigated by the Group Environment, Health & Safety (EHS) Department to identify root causes and recommend necessary corrective action. All trainee-nurses while on the job, are required to complete a three-year Diploma course at the As part of a recent effort to strengthen the safety culture, the Group began working towards obtaining Asiri Nurses Training School, which is a Ministry the OHSAS 18001:2007 (Occupational Health and Safety Standard) for Asiri Surgical Hospital, of Health accredited training facility. In 2017, Asiri Medical Hospital and Asiri Hospital – Matara. Asiri Central Hospital secured the OHSAS 18001 a batch of 52 nurses graduated from The Asiri certification in 2012. Nurses Training School; the 52nd batch to do so since the inception of the school in 1986. Several new initiatives were rolled out across the Group in line with the OHSAS 18001 process, among them is the establishment of department-wise safety teams to ensure safety compliance as In addition to job-related training, we also well as to monitor and report on potential safety gaps. provide employees with opportunities for greater career mobility. Underpinned by our succession Care for the Environment planning strategy, suitable employees are The Group recognises environmental sustainability as an important issue that needs to be given provided with leadership training and have due consideration in our day-to-day business activities. Accordingly, we remain fully committed to access to mentoring and coaching opportunities conduct our operations in full compliance with all environmental regulations in effect for our industry. to prepare them to take on bigger roles and responsibilities in the future. Further we have identified that the greatest environmental impact of our businesses arise as a result of the energy consumed and the waste generated on a daily basis. In addressing these concerns, we Workplace Health and Safety look to integrate environmentally sustainable practices as part of our day-to-day activities focusing on We firmly believe that our employees have the the following areas; right to a safe and healthy workplace and strive to create a positive work environment to ensure Energy Management the health, safety and wellbeing of our people. Given the nature of our business, our energy bill is occupies nearly 7% of annual overheads. We are well aware that reducing this will directly benefit the bottom line and have set ourselves a goal to To foster a safety culture, we promote active bring down energy costs by 3% year-on-year. engagement of our workforce on health, safety and wellbeing topics and continue to raise Reinforcing our commitment to effectively manage and reduce the energy we consume each day, awareness to improve our peoples’ knowledge we have implemented specific guidelines that underpin our long-term energy reduction targets. and capability on these matters. Continuous improvement in the way we manage and monitor energy consumption across all divisions of the business is a big part of this equation. Equally important are the ongoing investments We also place special emphasis on identified in energy efficient equipment and the special projects we undertake to further reduce overall energy high-risk areas with risk mitigation plans drawn consumption. As part of this effort, we have begun upgrading to energy-efficient lighting, heating and up and supported by relevant preventative cooling solutions across the Group. programmes. Facility Management & Safety Committees are in place to provide necessary Employee support is critical to the success of our energy management programme, which has led us oversight to ensure effective execution to conduct regular training to raise awareness and strengthen accountability at all levels. 46 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Group Sustainability Report

Electricity 2017/18 2016/17 Variance Comments Extending our commitment to recycle wherever Consumption Compared to possible and practical, the Group invested (kWh) year 2016/17 Rs. 2.8 Mn in commissioning a new effluent treatment plant at ASH. The investment adds to ASH 5,357,410 5,117,077 4.69% Increase is due to business the effluent treatment plants already in use at growth ACH and AH–M. AMH 2,753,880 2,767,010 -0.47% Improvement is due to energy management efforts Supporting Communities ACH 6,312,066 6,426,000 -1.8% Improvement is due to energy As a healthcare services provider, we consider it management efforts our duty to share our knowledge and expertise AH-M 912,197 for the betterment of the community. Our community outreach efforts are operationalised Waste Management on multiple platforms; Given that a considerable volume of waste is generated across the Group each day, the aim of our waste management programme is to minimise its harmful impact on the environment. Access to Free Healthcare for the Underprivileged While the 3R (Reduce-Reuse-Recycle) is an important aspect of our waste management programme, The Group’s flagship community effort is the we are mindful that for safety reasons, hazardous waste cannot be recycled. Hence all clinical waste is free-heart surgery initiative that provides the sent for incineration to a CEA-approved contractors. E-waste and Mercury waste are also outsourced opportunity for underprivileged children to to CEA-approved contractors for appropriate disposal. receive free surgery and aftercare through the Asiri Surgical Cardiac Care unit. Patients Meanwhile to come up with a sustainable solution for the disposal of solid (non-hazardous) waste for the programme are identified either at the in an environmental friendly manner, a new pilot project was initiated at ASH. The initiative, which free health camps organised by the Asiri Heart commenced in August 2018, is a collaborative effort between ASH, the National Solid Waste Centre in remote areas, or through referrals Management Centre, CMC and the CEA. received from the Lady Ridgeway Hospital. The cost of each surgery is partly or fully funded by donors who either make direct contributions Recyclable items 2017/18 2016/17 Variance Comments to the Group or do so anonymously through Recovered from Compared to the Gift of Life fund. In the event of partial Non-Clinical year 2016/17 donations, the remainder of the cost is met by Waste (Kg) the President’s Fund. ASH 19,214 9,068 52.80% Improvement is due to the waste management programme With an average of three surgeries being AMH 2,151 429 80.05% Improvement is due to the waste performed per month, the initiative has management programme supported 146 children since first being launched in 2011. ACH 16,800 22,710 -35.17%

AH-M 9,769 47 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Group Sustainability Report

Free Health Clinics Medical Internship Programme Our free health clinics are primarily aimed at raising community awareness regarding matters of The Group has a formal structured topical importance in today’s healthcare environment. internship programme to assist university undergraduates to complete their mandatory Free Consultation Clinic No. of Clinics Location Total No. of internship requirement attached to their Held Beneficiaries degree programme. During the FY 2017/18, approximately two dozen internships Cardiac Care 6 ACH/ASH 76 were granted in clinical as well as several Brain & Spine 77 ACH 1,428 administrative areas. Antenatal Programme 42 AHH 462 Asiri Breast Care 54 ACH 133 Special Projects Batticaloa Teaching Hospital Emergency and Liver Transplant 6 ASH 24 Accident Project (BEAP) Well Women's Clinic 7 AHH 18 The BEAP Project was initiated in 2015 by Dr. Total 2,141 David A Young and his team of volunteers attached to the “Foundation Supporting a Continuous Medical Education Programmes (CME) National Trauma Service in Sri Lanka". Asiri Often held in collaboration with industry stakeholders, Asiri Health’s CME initiatives are rolled out as Health being the Platinum Sponsor for the special knowledge sharing or topical discussion forums to enable Medical Officers and Nurses to project, donated a total sponsorship of Rs. 20M enhance their knowledge on current developments. towards the BEAP project. The construction of the Accident & Emergency Care Unit at the Asiri Group - CME Programmes 2017/18 Teaching Hospital, Batticaloa was completed and the facility was declared open on 17th June Target Group Topics No. of Date 2018. Participants

Paediatricians, World Asthma Day 2017 - Paediatric More than 80 May 2nd 2017 Annual Blood Donation Campaign VOGs, Consultants Asthma Conducted for the fifth consecutive year, & Medical officers the annual blood donation campaign is a commitment made by the staff of Asiri Health to Young Family Dexa Scan interpretation, pitfalls and 90 Young GPs February 17th donate blood to the National Blood Transfusion Doctors’ management of osteoporosis, rational 2018 Service (NBTS). Movement of antibiotic prescription for common South Asia Region infections

SLMA Members Medical ethics & accountability, End Over 100 February 28th of life care & palliative care, Genetics Doctors 2018 in Primary care, Fever & use of antibiotics, Antimicrobial Resistance 48 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Group Sustainability Report

Blood Donation Campaign Community Wellness Programmes – Free Clinics

Beach Cleanup Programme Health Awareness Programmes – Diabetes Walk

Fire & Safety Drill Medicare – National Healthcare Exhibition 49 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Risk Management Report

Integrated Risk Management The Functional Structure of Risk Management With an understanding that the decisions made by healthcare providers directly impact public Board of Directors health and safety, Asiri Group of Hospitals has (Softlogic Group) taken sphere of strategies to effectively manage emerging risks in the business. Since a single error could cause irreversible damage to a Group Board Audit patient’s life, and lead to expensive lawsuits and Committee excessive damages to the reputation, the Group has implemented a robust risk management framework that is based on industry standards and best practices, and is efficient, transparent Board of Directors and proactive. (Asiri Group of Hospitals) Group Head Risk & Audit While managing risk is a key responsibility of the Board of Directors, each and every employee of the Group is responsible for Risk Management in their sphere of operations. The Group has Board Audit Committee Board Sub- established an integrated and effective Risk (Asiri Hospital Holdings CEO committee on Management framework where significant risks PLC) Clinical Risk are identified, assessed, prioritised and managed by implementing appropriate risk mitigation actions. These actions are monitored through management systems where the heads of the business units act as first line of defense and Group Manager - provide useful information and feedback on Asiri Internal Audit risks.

Asiri Group of Hospitals has in place a Manager - Group IT Asiri Medical comprehensive system of internal controls, Security & Risk Hospital which is designed to ensure that risks are Internal mitigated and Group’s objectives are attained. Auditors Asiri Surgical The Board Audit Committee reviews the Hospital effectiveness of the risk management process periodically and recommend required changes Assistant Manager Asiri Central to Board of Directors. Operational Risk Hospital

Asiri Hospital Matara

Asiri Laboratories 50 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Risk Management Report

Key Risks Presented below is an account of key risks identified by Asiri Group of Hospitals together with potential impact and measures taken to mitigate those risks.

Risk Potential Impact Mitigation Strategy Clinical Risk The events or incidents occur in our Risks associated with patient care Asiri Group of Hospitals has provided stringent guidelines for incident daily practice will potentially affect the are vital in Healthcare industry. reporting, utilisation of informed consent documents and related quality of patient care. Clinical Risks can mediate other risks defensible documentation. including reputation and legal risk Asiri Group is keen on the patient care while incurring significant financial Constant monitoring and review of Clinical Risks are performed to and safety, thus; we have prioritised losses. ensure that the organisation’s Clinical Risk Management plan is most of the clinical risks and new adequate and effective. additions are promptly identified Since the likelihood and through patient feedbacks and consequences of Clinical Risks may The Management swiftly takes measures to address the identified industry analysis. frequently change, it has become risk areas and in the event any risk cannot be eliminated, steps have the most significant and vulnerable been taken to minimise such risks to a tolerable level. The attempt to area to Asiri Group of Hospitals in achieve international accreditation is to drive quality improvement terms of Risk. and risk minimisation strategy across the hospitals within the Group. Joint Commission International (JCI) for all aspects of its operations, including patients care & health, food and safety, quality management and laboratory management.

Specialist doctors and medical officers who join Asiri Group are subjected to a credentialing and privileging process to ensure they possess required skill and competence to deliver good clinical care to our patients. Similarly, the nursing professionals as well as the para medical staff are recruited with careful evaluation of their skill and competencies and there after encouraged on continuous professional development to keep up with evolving trends in technology. Infections Risk Healthcare-acquired infections The Hospital acquired infections due Asiri Group of hospitals has initiated comprehensive infection control (HAIs) would be critical to healthcare to cross contamination would lead strategies. Among many solutions, the Group ensures all sanitation industry and mostly the medical staff to prolong stay for some patients or systems are up to date, operational and ensure that staff understands of the hospitals and would hinder the undue complications with escalation how to properly use the systems to keep patients safe. These initiatives operational effectiveness in long-term. of treatment costs. HAI may affect continue to remind staff and visitors about basic infection control the smooth operation of the hospital techniques if health care professionals get affected with infectious diseases. 51 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Risk Management Report

Risk Potential Impact Mitigation Strategy Strategic Risks Failure to anticipate essential market Incompetent strategic decisions All strategic decisions are scrutinised by the Board of Directors who needs on a timely manner and will adversely affect shareholder have expertise knowledge and vast experience in the industry. develop strategies to have competitive objectives while failure to execute Recommended decisions are reviewed by the Softlogic Holdings edge over rivals refers to Strategic innovative decisions will hinder the Group Executive Board of Directors and thorough evaluations and Risk. It also relates and depends on expansion and opportunities in the assessments are been carried out prior to execution. future business plans and strategies emerging markets. including mergers & acquisitions, restructuring activities and innovations. Reputational Risk A threat or danger to the good name This type of risk may be difficult Asiri Hospitals maintain positive correlation with its stakeholders or standing of the Asiri Group of to realise financially. It is a matter by developing trust, confidence and win-win relationships while Hospitals. Reputational risk will occur; of corporate trust, which has a conforming international best practices. Well established complaint great influence on damaging the handing process is in place to address the issues expeditiously. ee Due to failure of internal processes reputation and has a severe impact ee Due to the negligence or on shareholder value. The Ethics Committee, comprising of industry specialists, provides an malicious actions of employees or advisory role on matters relating to research and clinical trials. ee Due to action of peripheral parties, like suppliers The hospitals’ nursing and other staffs undergo extensive training on patient management and customer service on a continuous basis. Operational Risk These are the risk of losses resulting Operational risk exists in the natural The Group is promoting and enhancing the effectiveness of from inadequate or failed internal course of business activity. Failure Operational Risk Management process which includes identification, processes, people and systems or from to manage operational risks can assessment, treatment, monitoring and controlling. external events. expose the Group to significant losses. We cannot identify all the risks we may come across, some maybe latent. So we have crisis management processes and business continuity responses designed to improve our resilience to unforeseen events - such as a supply chain disruption, employee repatriation, natural disasters, cyber-attacks, technical mishaps - and to minimise their impact on our stakeholders, reputation and performance.

This encompasses basic escalation and communication rules, guidelines for anticipation and action, and clear roles and responsibilities.

Additionally, IT Security policies and policy on confidentiality and security of information management have been implemented and frequent IT audits reviews are performed. 52 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Risk Management Report

Risk Potential Impact Mitigation Strategy Internal Processes The dynamic operational environment Internal processes are predominant We minimise operational risks by maintaining proper internal control requires effective and efficient internal in achieving business objectives and systems and initiating prompt responses to evolving risks. All the processes to achieve the edge ineffectiveness of which will lead to processes are continually reviewed by the Internal Audit department to of industry competition and gain severe financial or business losses. ensure that none of the risks been un attended. economical advantage. The impact is specific to each Internal processes have been standardised in accordance with JCI Inadequate internal controls may process and its contribution to the and other accreditation requirements. Audit trails are checked in adversely affect the continuity or continuity of the service. When an appropriate manner and red flags (if any) are raised to draw the effectiveness of internal processes. several processes failed, the attention and ensure proper action is been taken and implemented on cumulative impact might be greater a timely manner. than what is expected. Human Resources (People) Service industry, in which the Group Failures in human resource could While ensuring the safety and welfare of the employees, our risk operates, is heavily depending on affect the continuity of business management approach is directed towards minimising the Human human resources. operations. The consequences related concerns. could be serious, when loss of Risks may arise from employee key executives without suitable The Group has introduced a comprehensive recruitment and retention negligence, conflict of interest, fraud replacement. process. Qualified people are recruited after a proper screening. or misappropriation and due to poorly Employee requirements and satisfaction levels are efficiently and trained employees. The human capital Thus ability to recruit and retain effectively monitored through surveys. The gaps are addressed may affect by failure to attract, develop qualified and skilled healthcare promptly. and retained skilled workforce. professionals are crucial for the success of the organisation. A succession planning program is in place which includes; regular trainings, developments, promotions, KPI and supervision. External Events External events including natural Some extreme events can interrupt The events are identified by analysing historical data and conducting disasters and other similar types the entire service function whilst proper assessments based on the real time information from external of emergencies that confront keeping the alternate options limited. sources. Adequate business continuity measures have been taken organisations on a daily basis which to ensure that an uninterrupted service is provided. Additionally the affects the Continuity of Business. Unlike other industries, due to the revenue has been insured against uncontrollable events. necessity of business continuity in a disaster situation, stretched disaster Regular reviews are undertaken to ensure that adequate insurance recovery time may incur more covers are available to compensate financial losses. financial and business losses. 53 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Risk Management Report

Risk Potential Impact Mitigation Strategy Cyber and Information Security Risk The healthcare industry has moved Invades into information systems The Group has identified the importance of Information Security and to electronic healthcare records, will affect the business continuity has deployed numerous controls at both database and application whilst exposing to new patient privacy of the hospitals and will incur levels. Information Security policies & procedures have been concerns as these records are targeted both monetary and non-monetary developed based on ISO 27000. by cyber criminals. damages. Independent third party reviews and vulnerability assessments Increasing use of technology has Failure to adopt robust information are carried out frequent. Regular maintenance of IT infrastructure, hosted new levels of complexity and security controls could lead to scheduled data backups, offsite storage and round-the-clock IT threats such as: security breaches, potential risks of; support by the parent Group are some of the strategies adopted to system failures, malicious attacks, IT ensure zero losses of data during a system failure. Regular IT disaster fraud and many other issues. ee Unauthorised access to recovery testing are carried out to ensure the resilience. information and associated information systems. ee Unauthorised modifications and manipulations on information and databases. ee Unavailability of access to critical systems for the authorised users

Financial and business losses arise due to failure of IT systems are difficult to predict. Technological Risk The industry in which our Group Inability to adopt the latest We constantly pursue adoption of most innovative & advance operates is exposed to frequent pioneering technology could result methods for diagnostics and treatments. Research and innovations in technological revolutions. in loss of customers, leading to fall in Healthcare industry are regularly monitored. revenue and erosion of profits. Failure to adopt latest technologies The Group makes regular investments in pioneering technology and will drive the company towards training of staff for optional application of existing technology. technological obsolescence. 54 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Risk Management Report

Risk Potential Impact Mitigation Strategy Credit Risk There is a risk of a patient not having Credit Risk will lead the Group to We educate our customers of the services, associate cost and evaluate adequate funds to settle his / her bills financial concerns such as liquidity credit worthiness of corporates before granting credit facilities. at the time of discharge. and profitability. Cash flow issues Insurance policies of in-patients are validated at the time of patient may have a direct impact on its registration. service quality. Regular reviews are done to ensure that the introduced systems are functioning effectively and any impact on the performance of the assets of the Group. Interim bills are issued for in-patients for periodic bill settlements. Interest Rate Risk Interest rate risk exists in interest The Company has obtained multiple To mitigate the impact of Interest rate risk, more consideration is given bearing liabilities, such as loans facilities from various banks for to maintain minimum interest spreads during the rates are declining and overdrafts where the financial working capital, capital expenditure while fixed rates are encouraged during rising periods. expenses will increase due to and investments. increased interest rates. Close monitoring and supervision is given for macroeconomics trends Fluctuations of interest rates will to understand the market behaviour and to enable firm decision adversely affect the business by making. increasing financial costs. Legal and Compliance Risk Healthcare is one of highly regulated The Group will be exposed to Asiri Group of Hospitals is engaged in good corporate practices which industry and is bound with many legal penalties, financial forfeiture ensure the transparency, compliance with laws & regulation and laws and regulations adopted by the and material losses and the ethical business in all affairs with stakeholders. authorities. consequences of litigation are difficult to predict or quantify. In addition to complying with the Colombo Stock Exchange, Compliance risk arises when the Securities and Exchange Commission and Companies Act disclosure Group fails to act in accordance with Non- compliance would cause requirements, the Group also complies with Sri Lanka Accounting industry laws and regulations, internal severe reputation damages as well. Standards. policies or prescribed best practices. Related Party Transaction Review Committee has been established to assure the highest level of integrity and transparency. 55 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Corporate Governance Report

Board of Directors The Board of Directors are responsible to ee Communicate with shareholders effectively and serve the legitimate interest of the shareholders shareholders of creating and delivering ee Periodic and timely reporting to shareholders of the progress and performance of the Company sustainable shareholder value through to ee Review processes and procedures regularly and ensure that internal control is effective the management of the Group’s operations. ee Identify key risk areas and ensure that these risks are addressed and managed effectively The committees assist the Board in its ee Appoint and evaluate the performance of the Managing Director responsibilities, rendered in the form of reports ee Approve the Annual Budget and recommendations submitted to the Board. ee Authorisation of Directors’ conflicts or possible conflicts of interest ee Determination of independence of non-executive Directors Board Composition ee Ensure the continuation of the Company as a going concern The Board consists of eight directors, with a split between 2 executive and 6 non-executive Appointment and Re-election to the Board directors, out of whom 4 are independent. The Directors are appointed by the Board in a structured and transparent manner. Appointments are composition of the Board is in compliance made with due consideration given to the diversity of skills and experience within the Board. As per with the Corporate Governance Rules of the the Company’s Articles of Association, one third of the Directors shall retire from office at each Annual Colombo Stock Exchange. The Directors provide General Meeting and offer themselves for re-election. All directors appointed during the year seek re- the objectivity and are equipped with the skills election at the subsequent AGM. The Managing Director is not subject to retirement by rotation. and experience required to discharge their responsibilities in an effective manner. (Refer to Board Meetings and Attendance page 6 and 7 for the full profiles of the Directors). The Board meets on a quarterly basis and additional meetings are convened when necessary. Scheduled board meetings are arranged well in advance to ensure, as far as possible, that Directors Responsibilities of the Board can manage their time commitments. All Directors are provided with supporting documents and The key roles and responsibilities of the Board relevant information for each meeting and are expected to prepare themselves for and to attend all are as follows; board meetings, shareholders meetings and all meetings of the committees on which they serve, unless there are exceptional circumstances that prevent them from doing so. Directors have full ee Exercise leadership, enterprise, integrity and access to Group information and are entitled to obtain independent professional advice at the judgment in directing the Company so as to Group’s expense in appropriate situations. achieve continuing prosperity in a manner based on transparency, accountability and Chairman responsibility. The Chairman leads the Board in order to ensure that it operates effectively and fully discharges its ee Ensure a managed and effective process of fiduciary and regulatory responsibilities. The Chairman is also responsible for ensuring that no single Board appointments individual has autonomous decision making powers, thus protecting stakeholder interests. Within the ee Determine the Company’s purpose, values Group, the Chairman also serves as the Managing Director and together with the Senior Management and strategy and ensure that procedures Committee is responsible for recommending the strategic direction to be followed by the Group and and practices are in place for implementing the decisions of the Board. The performance of the Managing Director is reviewed ee Monitor and evaluate the implementation by the Board on an annual basis. of strategies and policies for better management performance Remuneration of the Board ee Ensure compliance with the relevant laws, The remuneration of the Directors is determined by the Board and is disclosed on page 93 of this regulations and codes of best practice on Annual Report. corporate governance 56 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Corporate Governance Report

Company Secretary Messrs Softlogic Corporate Services (Pvt) Ltd function as Company Secretaries to the Group. The Company Secretary provides guidance to the Board as a whole and to individual directors with regard to how their responsibilities should be discharged. The Company Secretary is also responsible for ensuring that the Board is compliant with the applicable rules and regulations and that all activities of the Board are in line with the appropriate procedures.

Board Committees The Board has delegated certain authorities to the Board Committees in order to manage the affairs of the Board. The committees operate under terms of reference approved by the Board.

Audit Committee Duties and Responsibilities Composition ee Review the Group’s annual and interim financial statements and compliance reports. Chairman ee Review the performance of the internal audit function. Mr. S A B Rajapaksa ee Review the effectiveness of the Group’s internal controls. Independent Non-executive Director ee Periodically approve and review the appointment and retirement of external auditors and their relationship with the Group. Committee members Mr. G L H Premaratne Independent Non-executive Director

Mr. J E Huxtable Independent Non-executive Director

Frequency of meetings Committee meets quarterly

Remuneration Committee Duties and Responsibilities Composition Provide recommendations to the Board on the following; Chairman Mr. G L H Premaratne ee Remuneration policy for executive directors Independent Non-executive Director ee Remuneration policy and specific incentives for certain senior executives ee Employee benefits and long-term incentive schemes Committee members Dr. S Selliah Principles governing the Group’s remuneration policy Independent Non-executive Director ee To deliver improved shareholder value by ensuring that individual performance and reward reflect and reinforce the business objectives of the Group. Frequency of meetings ee To support the recruitment, motivation and retention of high quality senior executives Committee meets once a year ee To ensure that performance is the key factor in determining individual reward ee To communicate the reward structure clearly and effectively to executives and shareholders 57 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Corporate Governance Report

Related Party Transactions Review Committee Duties and Responsibilities Composition ee Review in advance all the related party transactions carried out by the Company and its listed Chairman companies in the Group except related party transactions set out in Rule 9.5 of the Listing Rules of Mr. J E Huxtable the Colombo Stock Exchange. Independent Non-executive Director ee Formulating policies and procedure to review related party transactions of the company and of the Group and overseeing existing policies and procedures. Committee members ee Determining whether the relevant related party transactions are fair to, and in the best interest of the Mr. G L H Premaratne company and/or companies in the Group and its stakeholders. Independent Non-executive Director ee Determining whether the related party transactions that are to be entered into by the company or companies of the Group require the approval of the shareholders. Mr. S A B Rajapaksa ee Where necessary, the Committee may request the Board to approve related party transactions, Independent Non-executive Director which are under review by the Committee. ee Ensure that immediate market disclosures and disclosures in the Annual Report as required by the Frequency of meetings applicable rules and regulations are made appropriately. Committee meets at least once a quarter

Independence of the Directors Dr. S Selliah, Mr. G L H Premaratne, Mr. S A B Rajapaksa and Mr. J E Huxtable function as independent directors of the Company.

As per the Rules issued by the Colombo Stock Exchange, Dr. S Selliah and Mr. G L H Premaratne meet all the criteria of independence except one.

Dr. S Selliah and Mr. G L H Premaratne are Directors of Softlogic Holdings PLC which has a significant shareholding in the Company.

The Board having evaluated all the factors concluded that their independence have not been impaired due to them serving on the Board of another company which has a significant shareholding in the Company.

Compliance with Corporate Governance Rules of the CSE The following disclosures are made in conformity with Section 7 of the Listing Rules of the Colombo Stock Exchange;

Section Criteria Has the Company met the Criteria 7.10.1 Non-executive directors Complied with. Out of 8 directors 6 are non-executive directors. 7.10.2 Independent directors Complied with. There are four independent directors on the Board. All non-executive directors have submitted the declaration with regard to their independence/non-independence. 7.10.3 Disclosures relating to directors Dr. S Selliah and Mr. G L H Premaratne meet all the criteria except one. 7.10.5 Remuneration Committee Complied with. Comprises of two independent non-executive directors. The names of the members of the committee are given in the page 56 of the Annual Report. 7.10.6 Audit Committee Complied with. Comprises of three independent non-executive directors. The names of the members of the committee are given in the page 56 of the Annual Report. The report of the committee is given on page 59. The Chief Financial Officer attends all the meetings. 58 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Ethics Committee Report

The Ethics Committee of the Asiri Group of Members: Hospitals was constituted to serve as an advisory ee Prof. Rohan W Jayasekara, (Chairperson) body on matters relating to the conduct of (Emeritus Professor of Anatomy / Medical Geneticist, Faculty of Medicine, University of Colombo.) research and clinical trials within the Asiri Group ee Dr. Malik Fernando of Hospitals. Also, the matters concerning (Retired Physician/Member of Ethics Review Committee of the Sri Lanka Medical Association- ethics issues in patient care as described in sometime Chair, Ethics Committee SLMA) the Standard Operating Procedures, referred ee Dr. Arittha Wickramanayake to it by the Management and also the visiting (Attorney at Law /Precedent Partner, Nithya Partners) and resident staff. The committee reports all its ee Dr. Siva Selliah decisions to the Management. (Deputy Chairman of Asiri Group of Hospitals / Senior Lecturer, Dept. of Physiology, Faculty of Medicine University of Kelaniya) The committee is entrusted with the task of ee Prof. Kemal I Deen perusing on behalf of the Management, all (Consultant General Surgeon –Intestinal) proposals for research that are proposed to be ee Dr. Indrani Amarasinghe carried out on patients from the Asiri Hospital (Consultant Oncologist) Group: ee Prof. Chandani Wanigatunga (Professor in Pharmacology and Consultant Physician) ee To verify that the proposed investigators ee Dr. Kamal Weerapperuma have obtained ethics approval from Ethics (Company Director) Review Committee/s that have Strategic ee Prof. Shalini Sri Ranganathan Initiative for Developing Capacity in Ethical (Professor in Pharmacology and Specialist Paediatrician) Review [SIDCER] recognition from the Forum for Ethical Review Committees in the Asian and Western Pacific Region [FERCAP]; Sgd. ee To verify that the proposed investigators Prof. Rohan Jayasekara have obtained all other approvals and Chairman – Ethics Committee permissions necessary depending on the nature of the research and the proposed 29 June 2018 research subjects; and ee Also to verify that it meets other requirements that may be decided from time to time and set out as Committee Decisions.

The committee is constituted and operates in accordance with an SLMA Ethics Committee proposal for the establishment of Hospital Ethics Committees in Sri Lanka. 59 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Audit Committee Report

Purpose of the Committee Duties and Responsibilities The Committee is established to assist the Board The duties of the Audit Committee includes keeping under review the scope and results of the audit, of Directors in fulfilling its oversight responsibility its effectiveness, and the independence and objectivity of the Auditors. for the company’s financial reporting system, system of internal controls, risk management The committee carries out the following responsibilities: process, internal audit function, compliance with legal and regulatory requirements and Financial The Audit Committee review; review of independence and external auditors Statements, ee The quarterly and annual Financial Statements prior to its publication. performance. Financial Reporting ee Appropriateness and changes in Accounting Policies. Process and ee Significant estimates and judgement made by the management. Composition of the Committee and Accounting Policies ee Compliance with relevant Accounting Standards and applicable Meetings regulatory requirements. The Audit Committee is appointed by the Board ee Issues arising from the Internal Audit and Independent External Audit. of Directors and comprises of three independent ee The Company’s ability to continue as a going concern. Non-Executive Directors. The Names of the Internal Controls The Committee review and assess; Committee members are stated in the Corporate and Risk ee The internal control environment and areas of significant risks. Governance Report on Page 56. Management ee Effectiveness of the company's internal control system, including information technology security and control. The Audit Committee met on five occasions ee Policies and practices with respect to risk assessment and risk during the year under review. The activities of management ensuring that a process of sound system of internal the Audit Committee are quarterly reported to control is in place. the Board of Directors. The attendance at these ee Scope of internal and external auditors' review of internal control meetings was as follows: over financial reporting and obtain reports on significant findings and recommendations, together with management's responses. Name of Director Attendance Internal Auditing The Audit Committee review and approve; Mr. S A B Rajapaksa 5/5 ee The internal audit charter Mr. G L H Premaratne 5/5 ee Internal audit budget, resource plan including staffing, activities, and Mr. J E Huxtable 3/5 organisational structure of the function. ee Annual audit plan and all major changes to the plan and review the The Group Head of Risk & Audit of the Softlogic internal audit activity’s performance. Group and Group Manager - Audit of Asiri ee No unjustified restrictions or limitations to carry out duties. Hospitals were permanent attendees of these ee The work of the internal audit function and the effectiveness of the meetings. The Group Chief Financial Officer internal audit function. of Softlogic Group, Chief Financial Officer of IT Systems Auditing The Audit Committee review and asses; Asiri Hospitals, Directors of Operations and ee Effectiveness and efficiency Information System Audits for IT operations, the External Auditors attend the meeting by technologies, systems, structures and processes. invitation when required and the Company ee IT assets are safeguarded in terms of integrity, confidentiality and Secretary acted as the Secretary to the availability and effective IT risk management measures are in place. Committee. ee Information system audit plans. ee IT Governance activities. 60 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Audit Committee Report

External Audit The Audit Committee review; ee The external auditors' proposed audit scope and approach, including coordination of audit effort with internal audit. ee The performance of the external auditors, and exercise final approval on the appointment or discharge of the auditors. ee Review and confirm the independence and objectivity of the external auditors. ee Make recommendations to the Board, pertaining to appointment, re- appointment and removal of external auditors and to approve the remuneration and terms of engagement of the external auditors. ee Resolve any disagreements between management and the external auditor regarding financial reporting. Compliance The Audit Committee review; ee Effectiveness of the system for monitoring compliance with laws and regulations and the results of management's investigation. ee The findings of any examinations by regulatory agencies, and any auditor observations. ee Review the process for communicating the code of conduct to company personnel, and for monitoring compliance therewith. ee Obtain regular updates from management and company legal counsel regarding compliance matters.

The Audit Committee recommended to the Board of Directors that M/s Ernst & Young be re- appointed as the auditors of the Company for the financial year ending 31st March 2019, subject to the approval of the shareholders at the Annual General Meeting.

Evaluation of the Effectiveness of the Committee The Audit Committee conducts an annual evaluation of its own in terms of audit committee’s purpose, authorities, duties and responsibilities.

Sgd, S.A.B Rajapaksa Chairman – Audit Committee

29 June 2018 61 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Remuneration Committee Report

The Remuneration Committee is a sub- committee of the Board constituted under the Company’s Corporate Governance policies for the purpose of recommending the remuneration of Senior Management. The members, of the Committee comprise of 1 Non-Executive Independent Director and 2 Non-Executive Directors. The names of the Committee members are stated in the Corporate Governance Report on page 56.

The Directors’ emoluments are disclosed on page 93.

The Committee meets annually. The Committee has acted within the parameters set by its terms of reference.

Sgd. G L H Premaratne Chairman – Remuneration Committee

29 June 2018 62 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Related Party Transactions Review Committee Report

Purpose Softlogic Corporate Services (Pvt) Ltd., Secretaries of the Company function as the Secretary to the The Related Party Transaction Review Related Party Transactions Review Committee. Committee was established by the Board in order to comply with the Listing Rules of the Roles and Responsibilities Colombo Stock Exchange governing related 1. Reviewing in advance all proposed related party transactions of the Company and its listed party transactions in respect of listed companies companies in the Group in compliance with the Code. as per the Code of Best Practice on Related 2. Adopting policies and procedures to review related party transactions of the Company and its Party Transactions issued by the Securities and subsidiaries and reviewing and overseeing existing policies and procedures. Exchange Commission of Sri Lanka (SEC) (the 3. Determining whether related party transactions that are to be entered into by the Company “Code”) and Section 9 of the Listing Rules of the and/or its subsidiaries require the approval of the Board or Shareholders of the respective Colombo Stock Exchange (the “Rules”). companies. 4. If related party transactions are ongoing (recurrent related party transactions) the Committee The Board Related Party Transactions Review establishes guidelines for senior management to follow in its ongoing dealings with the Committee (the “Committee”) assists the Board relevant related party. in reviewing all related party transactions carried 5. Ensuring that no director of the Company shall participate in any discussion of a proposed out by the Company and its listed companies in related party transaction for which he or she is a related party, unless such Director is the Group by early adopting of the Code of Best requested to do so by the Committee for the express purpose of providing information Practice on Related Party Transaction as issued concerning the related party transaction to the Committee. by the Securities and Exchange Commission of 6. If there is any potential conflict in any related party transaction, the Committee may Sri Lanka. recommend the creation of a special committee to review and approve the proposed related party transaction. Composition 7. Ensuring that immediate market disclosures and disclosures in the Annual Report as required The Related Party Transactions Review by the applicable rules/regulations are made in a timely and detailed manner. Committee is appointed by the Board of Directors of the company and the following The Committee on behalf of the Board of Directors has given the following statement in respect of directors were served on the Committee as at the related party transactions. 31st March 2018. The related party transactions of the Company during the financial year have been reviewed by the ee Mr. J. E. Huxtable – Independent Non- committee and are in compliance with the section 09 of the Rules. executive Director (Chairman) ee Mr. S. A. B. Rajapaksa – Independent Non- executive Director Sgd. ee Mr. G. L. H. Premaratne – Independent Non- J. E. Huxtable executive Director Chairman – Related Party Transactions review Committee

The Chief Financial Officer attends all meetings 29 June 2018 by invitation. 63 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Statement of Directors Responsibility

The responsibilities of the Directors, in relation to financial statements comply with the Companies Act No. 07 of 2007 and are prepared in accordance the financial statements of the Company differ with Sri Lanka Accounting Standard (SLFRS/LKAS). from the responsibilities of the Auditors, which are set out in the Report of the Auditors on Page They are also responsible for safeguarding the assets of the Company and for taking reasonable 68. steps for the prevention and detection of fraud and other irregularities. In this regard the Directors have instituted an effective and comprehensive system of internal control. The Companies Act No. 07 of 2007 stipulates that the Directors are responsible for preparing The Directors are required to prepare financial statements and to provide the external auditors with the Annual Report and the financial statements. every opportunity to take whatever steps and undertake whatever inspections they may consider to Company law requires the Directors to prepare be appropriate to enable them to give their independent audit opinion. financial statements for each financial year, giving a true and fair view of the state of affairs The Directors are of the view that they have discharged their responsibilities as set out in this of the Company at the end of the financial year, statement. and of the Statement of Comprehensive Income of the Company and the Group for the financial Compliance Report year, which comply with the requirements of the The Directors confirm that to the best of their knowledge, all taxes, duties and levies payable by the Companies Act. Company, all contributions, levies and taxes payable on behalf of and in respect of the employees of the Company and other known statutory dues as were due and payable by the Company as at the The Directors consider that, in preparing date of the Statement of Financial Position have been paid or, where relevant provided for, in arriving financial statements set out on Pages 72 to 133 at the financial results for the year under review except as specified in note 25.3 to the financial of the Annual Report, appropriate accounting statements covering contingent liabilities. policies have been selected and applied in a consistent manner and supported by reasonable Compliance with Related Party Transactions Rules and prudent judgments and estimates, and Transactions of related parties (as defined in LKAS 24 – Related Parties Disclosure) with the Company that all applicable accounting standards have are set out in Note 28 to the Financial Statements. been followed. The Directors confirm that they have justified in adopting the going concern For and on behalf of the Board of Asiri Hospital Holdings PLC basis in preparing the financial statements since adequate resources are available to continue operations in the foreseeable future. Sgd. Softlogic Corporate Services (Pvt) Ltd The Directors are responsible for keeping proper Secretaries accounting records, which disclose reasonable accuracy, at any time, the financial position of 29 June 2018 the Company and to enable them to ensure the Colombo 64 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Annual Report of the Board of Directors on the Affairs of the Company

The Directors of Asiri Hospital Holdings PLC The Directors are of the view that these financial statements have been prepared in conformity have pleasure in presenting to the members with the requirements of the Companies Act No. 07 of 2007 and the Sri Lanka Financial Reporting their report together with the audited financial Standards. A statement in this regard is given on page 63. statements of the Company and the audited consolidated financial statements of the Group Auditor’s Report for the year ended 31st March 2018. The Auditor’s Report on the financial statements is given on page 68.

Principal Activities and Nature Accounting Policies The principal activity of the Company continues The accounting policies adopted in the preparation of the financial statements are given on pages 80 to be carrying out Health Care and Hospital to 90. There was no change in the accounting policies adopted. Services. Internal Control There has been no significant change in the The Board has overall responsibility for the Company’s system of internal control and review its nature of the Company’s principal activities effectiveness. The internal control system has been designed to meet the particular needs of during the year. the organisation concerned, and the risk to which it is exposed, and by their nature can provide reasonable but not absolute assurance against material mis-statement or loss. The Board is satisfied Review of Operations with the effectiveness of the internal control system for the period up to the date of signature of the A review of the operations of the Group and its accounts. performance during the year is contained in the Chairman’s Review on pages 21 to 22 of the Directorate Annual Report. This review together with the The following Directors held Office during the year under review. Financial Statements reflects the state of affairs of the Company and the Group. These reports ee Mr. A K Pathirage - Chairman / Managing Director form an integral part of the Directors’ Report. ee Dr. S Selliah - Deputy Chairman ee Dr. K M P Karunaratne - Group Chief Executive Officer Financial Statements ee Mr. G L H Premaratne Section 168 (b) of the Companies Act require ee Mr. S A B Rajapaksa that the Annual Report of the Directors to ee Mr. J E Huxtable include financial statements of the Company, ee Mr. V Narain (Resigned w.e.f. 21st November 2017) in accordance with Section 151 of the Act and ee Mr. V Bali Group financial statements for the accounting ee Mr. A N Thadani – (Appointed w.e.f. 21st November 2017) period, in accordance with section 152 of the ee Mr. A N Thadani - Alternate Director to Mr. V Bali (ceased to be an Alternate Director w.e.f. 21st Act. The requisite financial statements of the November 2017) Company are given on pages 72 to 133 of the ee Mr. M M Bajpai - Alternate Director to Mr. V Narain (ceased to be an Alternate Director w.e.f. 21st Annual Report. November 2017)

Directors’ Responsibility for Financial In terms of Article 24(6) of the Articles of Association of the Company, Dr. S Selliah and Dr. K M P Reporting Karunaratne retire by rotation and being eligible offer themselves for re-election. The Directors are responsible for the preparation of the Financial Statements of the Company to In terms of Article 24(2) of the Articles of Association of the Company, Mr. A N Thadani retires and reflect a true and fair view of the state of affairs. being eligible offer himself for re-election. 65 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Annual Report of the Board of Directors on the Affairs of the Company

The Directors have recommended the reappointment of Mr. G L H Premaratne who is 70 years Auditors of age, as a Director of the Company; and accordingly a resolution will be placed before the Messrs Ernst & Young, Chartered Accountants, shareholders in terms of Section 211 of the Companies Act in regard to the re- appointment of are willing to continue as Auditors of the Mr. G L H Premaratne. Company and a resolution proposing their reappointment will be tabled at the Annual Directors’ Shareholding General Meeting. The relevant interests of Directors in the shares of the Company are as follows: As far as the Directors are aware the Auditors Messrs Ernst & Young does not have any Name of Director No. of Shares No. of Shares relationship (other than that of an auditor) with as at 31/03/2018 as at 31/03/2017 the Company. The Auditors also does not have Mr. A K Pathirage 371,664 371,664 any interest in the Company or in the subsidiary companies. Dr. S Selliah - -

Dr. K M P Karunaratne 9,074 9,074 Dividends The Directors recommend that to the Mr. G L H Premaratne - - shareholders that the interim dividend of Rs. Mr. S A B Rajapaksa - - 0.60 per share paid on 29th March 2018 be considered as the final dividend for the financial Mr. J E Huxtable - - year ended 31st March 2018. Mr. V Bali - - Capital Expenditure Mr. A N Thadani - - The capital expenditure of the Group and the Company during the year amounted to Rs. 2,690 Interests Register Mn and Rs. 916 Mn respectively (2016/2017 – The Interests Register is maintained by the Company as per the Companies Act No. 07 of 2007. All Group Rs. 2,164 Mn & Company – Rs. 540 Mn) Directors have disclosed their interests pursuant to Section 192(2) of the said Act. details of which are given in note 9 to the financial statements. Directors’ Interests in Contracts and Proposed Contracts with the Company Directors’ interests in contracts, both direct and indirect are referred to in note 28 to the Financial Stated Capital Statements. The Directors have no direct or indirect interest in any other contract or proposed The Stated Capital of the Company as at 31st contract with the Company. March 2018 was Rs. 4,748,108,334 represented by 1,137,533,596 Ordinary Shares. Directors’ Remuneration Directors’ remuneration in respect of the Company and the Group for the financial year 2017/2018 Reserves are given in note 5 to the Financial Statements on page 93. The total reserves of the Group and the Company as at 31st March 2018 amounted to Rs. 2,743 Mn Donations and Rs. 2,781 Mn respectively. The composition The donations made by the Company during the year amounted to Rs. 7,528,890 (2016/2017 - of reserves is shown in the Statement of Changes Rs. 6,951,500). in Equity in the financial statements. 66 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Annual Report of the Board of Directors on the Affairs of the Company

Shareholders’ Information Going Concern The distribution of shareholders is indicated on The Board is satisfied that the Company has pages 134 and 135 in the Annual Report. There adequate resources to continue its operations were 5,307 registered shareholders as at 31st in the foreseeable future and the Directors have March 2018. adopted the going-concern basis in preparing the accounts. Share Information Information on share trading is given on page Annual General Meeting 135 of the Annual Report. The Thirty Eighth Annual general Meeting of the Company will be held at Hotel Janaki, Fife Events after the Date of the Statement of Road, Colombo 05 on Friday the 14th day of Financial Position September 2018 at 12.00 p.m. The Notice of the No circumstances have arisen and no material 38th Annual General Meeting is on page 138 of events have occurred after the date of Statement the Annual Report. of Financial Position, which would require adjustments to, or disclosure in the accounts For and on behalf of the Board other than those disclosed in Note 27 to the Financial Statements. Sgd. Statutory Payments Director The Directors, to the best of their knowledge and belief are satisfied that all taxes, duties and Sgd. levies payable by the Company and the Group, Director all contributions, levies and taxes payable on behalf of, and in respect of, the employees Sgd. of the Company and the Group, and all other Secretaries known statutory dues as were due and payable Softlogic Corporate Services (Pvt) Ltd by the Company and the Group as at the date of the Statement of Financial Position have 29 June 2018 been paid or, where relevant provided for, except as specified in Note 25.3 to the Financial Statements, covering contingent liabilities. 67 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18

Financial Information 68 Independent Auditors’ Report 72 Statement of Profit or Loss 73 Statement of Comprehensive Income 74 Statement of Financial Position 76 Statement of Changes in Equity 78 Statement of Cash Flows 80 Notes to the Financial Statements

Financial Calendar Financial Year End 31 March 2018 Announcement of Quarterly Financial Performance

1st Quarter 14-Aug-2017 2nd Quarter 13-Nov-2017 3rd Quarter 15-Feb-2018 4th Quarter 31-May-2018 Notice of Annual General Meeting 29-Jun-2018 Annual General Meeting 14-Sep-2018 68 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Independent Auditors’ Report

TO THE SHAREHOLDERS OF ASIRI HOSPITAL HOLDINGS PLC Report on the Audit of the Consolidated accordance with the Code of Ethics issued by CA to respond to our assessment of the risks of Financial Statements Sri Lanka (Code of Ethics) and we have fulfilled our material misstatement of the financial statements. Opinion other ethical responsibilities in accordance with the The results of our audit procedures, including the We have audited the financial statements of Asiri Code of Ethics. We believe that the audit evidence procedures performed to address the matters Hospital Holdings PLC (“the Company”) and the we have obtained is sufficient and appropriate to below, provide the basis for our audit opinion on the consolidated financial statements of the Company provide a basis for our opinion. accompanying financial statements. and its subsidiaries (“the Group”), which comprise the statement of financial position as at 31 March Emphasis of Matter 2018, and the statement of profit or loss, statement We draw attention to Note 25.3 to the financial of comprehensive income, statement of changes statements which describes a contingent income in equity and statement of cash flows for the year tax liability. Our opinion is not qualified in respect of then ended, and notes to the financial statements, this matter. including a summary of significant accounting policies. Key Audit Matters Key audit matters are those matters that, in our In our opinion, the accompanying financial professional judgement, were of most significance statements of the Company and the Group give in our audit of the financial statements of the a true and fair view of the financial position of the current period. These matters were addressed in Company and the Group as at 31 March 2018, and the context of our audit of the financial statements of their financial performance and cash flows for as a whole, and in forming our opinion thereon, the year then ended in accordance with Sri Lanka and we do not provide a separate opinion on these Accounting Standards. matters. For each matter below, our description of how our audit addressed the matter is provided in Basis for Opinion that context. We conducted our audit in accordance with Sri Lanka Auditing Standards (SLAuSs). Our We have fulfilled the responsibilities described in responsibilities under those standards are further the Auditor’s responsibilities for the audit of the described in the Auditor’s responsibilities for financial statements section of our report, including the audit of the financial statements section of in relation to these matters. Accordingly, our audit our report. We are independent of the Group in included the performance of procedures designed 69 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Independent Auditors’ Report

Key Audit Matter How our Audit Addressed the Key Audit Matter Revaluation of Freehold Land and Buildings of the Our audit procedures focused on the valuations performed by the external valuer engaged by the Group Group, included the following procedures, among others. As of 31 March 2018, the Group carried freehold land and building at fair value amounting to Rs. 11 Bn, which ee We evaluated the competence, capabilities and objectivity of the external valuer appointed by represents approximately 50% of the total assets of the Group. the management. ee We read the valuation report issued by the valuer to obtain an understanding of the work of The Group engaged an external valuer in determining the valuer and evaluated its appropriateness as audit evidence for the recorded valuation. the value. The valuation of freehold land and building ee We engaged our internal specialised resources to evaluate the appropriateness of the valuation was significant to our audit due to the use of significant method used and reasonableness of other key assumptions applied by the external valuer. estimates and inputs as disclosed in Note 9.1.9 to the ee We assessed the overall adequacy of the related disclosures in Note 9.1.9 to the financial financial statements. statements. Tax-related Contingent Liability in a Subsidiary Our audit procedures included the following; A dispute has arisen with the Department of Inland Revenue with regard to applicability of the tax exemption ee We assessed the management’s judgement and evaluation in respect of tax-related period as explained in Note 25.3. Due to the complexity of contingent liability. the matter and the uncertainty around the tax treatment, ee We inspected the opinions obtained by the management from its tax and legal consultants in we considered this as a key audit matter. connection with the dispute. ee We assessed the appropriateness of the disclosures made in Note 25.3 regarding tax related contingent liability. Interest Bearing Loans and Borrowings of the Group Our audit procedures included the following; As disclosed in Note 18, the Group’s total interest bearing loans and borrowings amounted to Rs. 10.4 Bn, which ee We obtained an understanding of the covenants attached to external borrowings, by reading represents a significant portion of its total liabilities. The the loan agreements. maturities of such interest-bearing loans and borrowings ee We evaluated the statement prepared by the management and tabled at a board meeting on are disclosed in Note 18. the Group’s compliance with applicable financial covenants as at 31 March 2018. ee We obtained confirmations from external lending institutions about compliance by the Group The management’s assessment of Group’s ability to with covenants as at the year end. continue to meet its financial covenants and liquidity risk ee We assessed the adequacy of the disclosures made in Note 18 and Note 29 to the financial aspects were largely based on expectations and informed statements relating to the interest bearing loans and borrowings and liquidity risk aspects. estimates. Therefore we considered compliance with financial covenants and Group’s liquidity risk aspects as a key audit matters. 70 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Independent Auditors’ Report

Key Audit Matter How our Audit Addressed the Key Audit Matter Revenue of the Group Our audit procedures included the following, among others; The Group’s revenue generated from its healthcare services is disclosed in Note 3.1 together with the related ee We carried out audit procedures over revenue measurement by testing on a sample basis, accounting policy in 2.4.4. transactional level pricing and applicable documentary evidence. ee We discussed with management regarding the contractual arrangements where consultant We considered revenue as a focus area due to the medical personnel are involved, and tested on a sample basis the appropriateness of the complexity of the pricing structure, its high volume, recognition of revenue on a gross or net basis. determination of appropriateness of gross or net basis of ee We obtained an understanding about the key IT and manual controls over the occurrence of revenue recognition in certain arrangements, and reliance revenue and tested the same on a sample basis. on IT controls. ee We performed specific audit procedures over cash collection related to revenue covering a sample of locations where the Group’s business is carried out. ee We assessed the adequacy of the disclosures made in Note 3.1 in the financial statement.

Other Information Included in the Group’s determines is necessary to enable the preparation aggregate, they could reasonably be expected to 2018 Annual Report of financial statements that are free from material influence the economic decisions of users taken on Other information consists of the information misstatement, whether due to fraud or error. the basis of these financial statements. included in the Annual Report, other than the financial statements and our auditor’s report In preparing the financial statements, management As part of an audit in accordance with SLAuSs, thereon. Management is responsible for the other is responsible for assessing the Group’s ability we exercise professional judgement and maintain information. to continue as a going concern, disclosing, as professional skepticism throughout the audit. We applicable, matters related to going concern and also: Our opinion on the financial statements does not using the going concern basis of accounting unless cover the other information and we do not express management either intends to liquidate the Group ee Identify and assess the risks of material any form of assurance conclusion thereon. or to cease operations, or has no realistic alternative misstatement of the financial statements, but to do so. whether due to fraud or error, design and In connection with our audit of the financial perform audit procedures responsive to statements, our responsibility is to read the other Those charged with governance are responsible those risks, and obtain audit evidence that is information and, in doing so, consider whether the for overseeing the Company’s and the Group’s sufficient and appropriate to provide a basis other information is materially inconsistent with the financial reporting process. for our opinion. The risk of not detecting a financial statements or our knowledge obtained material misstatement resulting from fraud in the audit or otherwise appears to be materially Auditor’s Responsibilities for the Audit of the is higher than for one resulting from error, as misstated. If, based on the work we have performed, Financial Statements fraud may involve collusion, forgery, intentional we conclude that there is a material misstatement of Our objectives are to obtain reasonable assurance omissions, misrepresentations, or the override this other information, we are required to report that about whether the financial statements as a whole of internal control. fact. We have nothing to report in this regard. are free from material misstatement, whether due to ee Obtain an understanding of internal control fraud or error, and to issue an auditor’s report that relevant to the audit in order to design Responsibilities of Management and Those includes our opinion. Reasonable assurance is a audit procedures that are appropriate in the Charged with Governance high level of assurance, but is not a guarantee that circumstances, but not for the purpose of Management is responsible for the preparation of an audit conducted in accordance with SLAuSs expressing an opinion on the effectiveness of financial statements that give a true and fair view in will always detect a material misstatement when it the internal controls of the Company and the accordance with Sri Lanka Accounting Standards, exists. Misstatements can arise from fraud or error Group. and for such internal control as management and are considered material if, individually or in the 71 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Independent Auditors’ Report

ee Evaluate the appropriateness of accounting We also provide those charged with governance policies used and the reasonableness of with a statement that we have complied with accounting estimates and related disclosures ethical requirements in accordance with the made by management. Code of Ethics regarding independence, and to ee Conclude on the appropriateness of communicate with them all relationships and other management’s use of the going concern matters that may reasonably be thought to bear on basis of accounting and, based on the audit our independence, and where applicable, related evidence obtained, whether a material safeguards. uncertainty exists related to events or conditions that may cast significant doubt From the matters communicated with those on the Group’s ability to continue as a going charged with governance, we determine those concern. If we conclude that a material matters that were of most significance in the audit uncertainty exists, we are required to draw of the financial statements of the current period and attention in our auditor’s report to the related are therefore the key audit matters. We describe disclosures in the financial statements or, if these matters in our auditor’s report unless law or such disclosures are inadequate, to modify regulation precludes public disclosure about the our opinion. Our conclusions are based on matter or when, in extremely rare circumstances, the audit evidence obtained up to the date of we determine that a matter should not be our auditor’s report. However, future events or communicated in our report because the adverse conditions may cause the Group to cease to consequences of doing so would reasonably be continue as a going concern. expected to outweigh the public interest benefits of ee Evaluate the overall presentation, structure such communication. and content of the financial statements, including the disclosures, and whether the Report on Other Legal and Regulatory financial statements represent the underlying Requirements transactions and events in a manner that As required by section 163 (2) of the Companies achieves fair presentation. Act No. 07 of 2007, we have obtained all the ee Obtain sufficient appropriate audit evidence information and explanations that were required regarding the financial information of the for the audit and, as far as appears from our entities or business activities within the Group examination, proper accounting records have been to express an opinion on the consolidated kept by the Company. financial statements. We are responsible for the direction, supervision and performance of the CA Sri Lanka membership number of the Group audit. We remain solely responsible for engagement partner responsible for signing this our audit opinion. independent auditor’s report is 2199.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant 29 June 2018 deficiencies in internal control that we identify Colombo during our audit. 72 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Statement of Profit or Loss

GROUP COMPANY Note 2018 2017 2018 2017 Year ended 31 March 2018 Rs. Rs. Rs. Rs.

Revenue 3.1 12,025,177,850 10,396,219,066 3,731,903,045 3,239,833,772 Cost of Services (6,476,261,852) (5,683,139,918) (1,739,368,942) (1,487,725,028) Gross Profit 5,548,915,998 4,713,079,148 1,992,534,103 1,752,108,744 Other Income 3.2 910,878,971 178,480,250 1,397,120,434 1,048,906,512 Administrative Expenses (2,653,561,961) (2,446,357,229) (797,108,639) (644,069,157) Selling and Distribution Costs (399,276,597) (322,670,540) (155,032,386) (131,675,304) Finance Cost 4.1 (869,506,478) (834,866,565) (921,127,384) (803,985,910) Finance Income 4.2 65,791,023 31,375,734 42,164,298 18,495,832 Share of Loss of Associate (3,609,444) (21,832,701) - - Profit Before Tax 5 2,599,631,512 1,297,208,097 1,558,550,426 1,239,780,717 Income Tax Expense 6 (699,567,431) (177,205,985) (300,413,973) (57,780,246) Profit for the Year 1,900,064,081 1,120,002,112 1,258,136,453 1,182,000,471

Attributable to: Equity Holders of the Parent Company 1,738,518,587 1,028,018,555 Minority Interest 161,545,494 91,983,557 1,900,064,081 1,120,002,112

Earnings Per Share - Basic 7 1.53 0.90 1.11 1.04 Earnings Per Share - Diluted 7 1.53 0.90 1.11 1.04 Dividend Per Share - Ordinary Shares 8 0.60 0.95 0.60 0.95

The Accounting Policies and Notes on pages 80 through 133 form an integral part of these Financial Statements. 73 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Statement of Comprehensive Income

GROUP COMPANY Note 2018 2017 2018 2017 Year ended 31 March 2018 Rs. Rs. Rs. Rs.

Profit for the Year 1,900,064,081 1,120,002,112 1,258,136,453 1,182,000,471

Other Comprehensive Income to be Reclassified to Profit or Loss in Subsequent Periods (Net of Tax): Loss on Available for Sale Financial Assets 13.1 a (16,539,179) (71,715,773) - - Net Other Comprehensive Income to be Reclassified to Profit or Loss in Subsequent Periods (Net of Tax) (16,539,179) (71,715,773) - -

Other Comprehensive Income not to be Reclassified to Profit or Loss in Subsequent Periods (Net of Tax): Revaluation of Land and Building 9.1 1,003,884,280 693,407,241 458,919,029 280,333,245 Deferred Tax on Land (701,112,570) - (451,868,285) - Deferred Tax on Revaluation of Building (271,094,806) (31,489,857) (21,312,479) (6,018,029) Actuarial Loss on Post Employment Benefit Liability 21.1 (8,708,294) (21,512,233) (16,841,181) (11,501,970) Deferred Tax on Post Employment Benefit Liability 2,806,995 2,719,355 4,715,531 1,380,236 Net Other Comprehensive Income not to be Reclassified to Profit or Loss in Subsequent Periods (Net of Tax): 25,775,605 643,124,506 (26,387,384) 264,193,482 Other Comprehensive Income for the year (Net of Tax) 9,236,426 571,408,733 (26,387,385) 264,193,482 Total Comprehensive Income for the year (Net of Tax) 1,909,300,507 1,691,410,845 1,231,749,068 1,446,193,953

Total Comprehensive Income Attributable to: Equity Holders of the Parent Company 1,783,586,065 1,569,204,739 Minority Interest 125,714,442 122,206,106 1,909,300,507 1,691,410,845

The Accounting Policies and Notes on pages 80 through 133 form an integral part of these Financial Statements. 74 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Statement of Financial Position

GROUP COMPANY Note 2018 2017 2018 2017 As at 31 March 2018 Rs. Rs. Rs. Rs.

ASSETS Non-current Assets Property, Plant and Equipment 9 17,118,347,414 14,370,021,407 3,922,641,720 2,701,692,823 Leasehold Property 10 917,568,500 971,366,000 - - Goodwill 11 548,706,564 548,706,564 - - Investment in Subsidiaries 12 - - 11,894,844,806 11,594,804,729 Investment in Associate/Joint Venture 12.5 31,557,856 8,167,299 30,000,000 30,000,000 Financial Assets - Available for Sale 13.1 345,761,723 349,972,373 - - Deferred Tax Assets 20 - 107,562,373 - - 18,961,942,057 16,355,796,016 15,847,486,526 14,326,497,552

Current Assets Inventories 14 523,340,748 515,310,787 125,142,265 128,755,785 Trade and Other Receivables 15.1 534,426,511 475,411,929 767,431,341 502,097,251 Advances and Prepayments 15.2 413,747,577 422,235,856 132,465,324 120,055,165 Cash and Short-term Deposits 24.1 1,297,339,711 1,072,828,376 613,715,160 535,703,167 2,768,854,547 2,485,786,948 1,638,754,090 1,286,611,368 Total Assets 21,730,796,604 18,841,582,964 17,486,240,616 15,613,108,920

EQUITY AND LIABILITIES Capital and Reserves Stated Capital 16 4,748,108,334 4,748,108,334 4,748,108,334 4,748,108,334 Revaluation Reserve 17 2,376,640,086 2,311,856,820 1,250,180,448 1,264,442,182 Available for Sale Reserve 79,448,457 92,512,503 - - Reserve on Consolidation (862,298,509) (840,431,573) - - Retained Earnings 1,149,356,989 100,010,303 1,530,660,662 967,170,017 Share Holders' Fund 7,491,255,357 6,412,056,387 7,528,949,444 6,979,720,533 Minority Interest 700,716,884 946,374,795 - - Total Equity 8,191,972,241 7,358,431,182 7,528,949,444 6,979,720,533

Non-current Liabilities Interest Bearing Loans and Borrowings 18 6,611,898,247 6,930,174,630 3,149,739,843 4,055,697,792 Amount due on Leasehold Property 19.1 22,056,667 26,128,667 - - Deferred Tax Liabilities 20 1,312,292,329 271,906,389 631,658,329 71,122,763 Post Employment Benefit Liability 21.1 465,672,352 400,972,781 183,489,016 157,581,884 8,411,919,595 7,629,182,467 3,964,887,188 4,284,402,439 75 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Statement of Financial Position

GROUP COMPANY Note 2018 2017 2018 2017 As at 31 March 2018 Rs. Rs. Rs. Rs.

Current Liabilities Trade and Other Payables 22.1 569,382,541 439,886,417 91,111,628 120,820,206 Other Payables 22.2 313,770,899 300,051,679 88,745,981 77,747,209 Dividend Payable 55,985,987 619,562,063 48,941,353 613,219,417 Interest Bearing Loans and Borrowings 18 3,874,204,421 2,395,026,812 5,581,725,277 3,526,111,612 Amount due on Leasehold Property 19.1 4,072,000 4,072,000 - - Income Tax Payable 23 309,488,920 95,370,344 181,879,745 11,087,504 5,126,904,768 3,853,969,315 5,992,403,984 4,348,985,948 Total Equity and Liabilities 21,730,796,604 18,841,582,964 17,486,240,616 15,613,108,920

I certify that these Financial Statements are in compliance with the requirements of the Companies Act No. 7 of 2007.

Sgd. Chief Financial Officer

The Board of Directors is responsible for these Financial Statements. Signed for and on behalf of the Board by:

Sgd. Sgd. Director Director

The Accounting Policies and Notes on pages 80 through 133 form an integral part of these Financial Statements.

29 June 2018 Colombo 76 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Statement of Changes in Equity

GROUP Note stated Available for revaluation reserve on retained Minority Total capital sale Reserve reserve consolidation earnings interest Year ended 31 March 2018 rs. Rs. Rs. Rs. Rs. Rs. Rs.

As at 01 April 2016 4,748,108,334 159,304,358 1,685,824,175 (832,199,890) 170,703,270 951,522,179 6,883,262,426 Profitfor the Year - - - - 1,028,018,555 91,983,557 1,120,002,112 Other Comprehensive Income - (66,791,855) 626,032,645 - (18,054,606) 30,222,549 571,408,733 Total Comprehensive Income - (66,791,855) 626,032,645 - 1,009,963,949 122,206,106 1,691,410,845 Effect of Changes in Holdings of Subsidiary Companies - - - (8,231,683) - (517,738) (8,749,421) Final Dividends 2015/16 and Interim Dividends 2016/17 8 - - - - (1,080,656,916) - (1,080,656,916) Subsidiaries Dividend to Minority Shareholders - - - - - (126,835,752) (126,835,752) As at 31 March 2017 4,748,108,334 92,512,503 2,311,856,820 (840,431,573) 100,010,303 946,374,795 7,358,431,182

Profitfor the Year - - - - 1,738,518,587 161,545,494 1,900,064,081 Other Comprehensive Income - (13,064,046) 64,783,266 - (6,651,743) (35,831,052) 9,236,426 Total Comprehensive Income - (13,064,046) 64,783,266 - 1,731,866,844 125,714,442 1,909,300,506 Effect of Changes in Holdings of Subsidiary Companies - - - (21,866,936) - (253,667,410) (275,534,346) Final Dividends 2017/18 8 - - - - (682,520,158) - (682,520,158) Subsidiaries Dividend to Minority Shareholders - - - - - (117,704,943) (117,704,943) As at 31 March 2018 4,748,108,334 79,448,457 2,376,640,086 (862,298,509) 1,149,356,989 700,716,884 8,191,972,241

The Accounting Policies and Notes on pages 80 through 133 form an integral part of these Financial Statements. 77 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Statement of Changes in Equity

COMPANY Note stated Revaluation retained Total capital reserve Earnings Year ended 31 March 2018 Rs. Rs. Rs. Rs.

As at 01 April 2016 4,748,108,334 990,126,966 875,948,196 6,614,183,496 Profit for the Year - - 1,182,000,471 1,182,000,471 Other Comprehensive Income - 274,315,216 (10,121,734) 264,193,482 Total Comprehensive Income - 274,315,216 1,171,878,737 1,446,193,954 Final Dividends 2015/16 and Interim Dividends 2016/17 8 - - (1,080,656,916) (1,080,656,916) As at 31 March 2017 4,748,108,334 1,264,442,182 967,170,017 6,979,720,533

Profit for the Year - - 1,258,136,453 1,258,136,453 Other Comprehensive Income - (14,261,734) (12,125,650) (26,387,383) Total Comprehensive Income - (14,261,734) 1,246,010,803 1,231,749,069 Final Dividends 2017/18 8 - - (682,520,158) (682,520,158) As at 31 March 2018 4,748,108,334 1,250,180,448 1,530,660,662 7,528,949,444

The Accounting Policies and Notes on pages 80 through 133 form an integral part of these Financial Statements. 78 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Statement of Cash Flows

GROUP COMPANY note 2018 2017 2018 2017 Year ended 31 March 2018 rs. Rs. Rs. Rs.

Cash Flows From Operating Activities Profit Before Income Tax Expense 2,599,631,512 1,297,208,097 1,558,550,426 1,239,780,717

Adjustments for Depreciation 9 862,931,249 784,744,168 144,434,494 123,210,011 Amortisation of Leasehold Assets 10 53,797,500 3,526,646 - - Investment in associate loss 12.5 3,609,444 21,832,701 - - Net (Profit)/Loss on Sale of Property, Plant and Equipment 3.2 (267,169) (1,115,543) 1,842,813 1,521,837 Provision for Bad and Doubtful Debts 5 21,810,580 12,532,473 3,623,178 329,282 Provision for Retirement Gratuity 21.1 97,690,066 80,844,508 36,395,542 30,353,674 Finance Expense 4.1 869,506,478 834,866,565 909,477,438 778,914,151 Investment Income (766,309,077) (18,893,669) (1,323,221,375) (923,348,612) Guarantee Income 4.2 - - (24,505,731) (17,727,698) Operating Profit Before Working Capital Changes 3,742,400,583 3,015,545,947 1,306,596,785 1,233,033,362

Changes in Working Capital (Increase)/Decrease in Inventories (8,029,960) (71,252,583) 3,613,520 (23,269,819) (Increase)/Decrease in Trade and Other Receivables (80,577,990) (91,090,260) (268,957,271) 131,423,147 (Increase)/Decrease in Advances and Prepayments 8,488,278 138,726,603 (12,410,159) (36,752,134) Decrease Amounts Due from Related Parties - 116,845,380 - - Increase/(Decrease) in Trade and Other Payables 122,451,490 (17,868,059) (29,708,584) 31,088,394 Increase/(Decrease) in Other Payables 13,719,220 (413,428,672) 10,998,773 (13,239,251) Cash Generated from Operations 3,798,451,621 2,677,478,356 1,010,133,064 1,322,283,699

Income Tax Paid (306,900,924) (261,825,847) (37,551,399) (72,626,796) Defined Benefit Plan Costs Paid 21.1 (41,698,789) (52,666,018) (27,329,591) (29,804,917) Finance Cost Paid (869,506,478) (834,866,565) (909,477,438) (778,914,151) Net Cash from Operating Activities 2,580,345,430 1,528,119,926 35,774,636 440,937,835 79 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Statement of Cash Flows

GROUP COMPANY note 2018 2017 2018 2017 Year ended 31 March 2018 rs. Rs. Rs. Rs.

Cash Flows From/(Used in) Investing Activities Acquisition of Property, Plant and Equipment 9 (2,689,517,653) (2,152,968,544) (915,514,715) (534,579,257) Investment in Leasehold Property 10 - (918,825) - - Investment in Associates (27,000,000) (30,000,000) - (30,000,000) Investment in Subsidiaries - - (275,534,347) (8,749,422) Proceeds from Disposal of Property, Plant and Equipment 82,411,844 87,975,216 7,207,549 25,300,425 Interest/ Dividend Received 754,435,538 4,829,846 1,323,221,375 923,348,612 Net Cash Flows Used in Investing Activities (1,879,670,271) (2,091,082,307) 139,379,862 375,320,358

Cash Flows From /(Used in) Financing Activities Dividends Paid (1,246,798,220) (503,690,470) (1,246,798,220) (507,248,121) Dividends Paid to Minority by Subsidiaries (110,660,309) (126,835,752) - - Proceeds from Term Loans 2,116,650,541 2,986,257,671 1,385,000,000 1,584,000,000 Repayment of Term Loans (1,402,271,786) (2,211,942,364) (1,133,620,295) (1,603,530,136) Repayment of Lease Obligations (11,676,727) (11,217,639) (7,900,640) (7,016,183) Acquisition of Non Controlling Interest (275,534,346) (8,749,421) - - Repayment of Amount due on Leasehold Property 19 (4,072,000) (4,072,000) - - Net Cash Flows from/ (Used in) Financing Activities (934,362,847) 119,750,025 (1,003,319,155) (533,794,440)

Net Increase/(Decrease) in Cash and Cash Equivalents (233,687,688) (443,212,356) (828,164,657) 282,463,752

Cash and Cash Equivalents at the Beginning of the Year (151,676,919) 291,535,437 (196,010,322) (478,474,074) Cash and Cash Equivalents at the End of the Year 24.2 (385,364,607) (151,676,919) (1,024,174,979) (196,010,322)

The Accounting Policies and Notes on pages 80 through 133 form an integral part of these Financial Statements. 80 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

1. corporate Information 2.1.1 Statement of Compliance presumption and when the Group has less than 1.1 General The financial statements of the Company and a majority of the voting or similar rights of an Asiri Hospital Holdings PLC (“Company”) is a Group have been prepared in accordance with investee, the Group considers all relevant facts public limited liability Company, incorporated the Sri Lanka Accounting Standards as issued and circumstances in assessing whether it has and domiciled in Sri Lanka and listed on the by the Institute of Chartered Accountants of Sri power over an investee, including: Colombo Stock Exchange. The registered office Lanka. and principal place of business is located at No. 1. The contractual arrangement with the other 181, Kirula Road, Colombo 5. The preparation and presentation of these vote holders of the investee financial statements is in compliance with the 2. Rights arising from other contractual 1.2 principal Activities and Nature of requirements of the Companies Act No.07 of arrangements Operations 2007. 3. The Group’s voting rights and potential During the period, principal activities of the voting rights Company were to operate a hospital, provide 2.1.2 Comparative Information healthcare services and managing and holding The accounting policies adopted are consistent The Group re-assesses whether or not it controls of investments in the healthcare industry . with those of the previous financial year. an investee if facts and circumstances indicate that there are changes to one or more of the The principal activities of the Subsidiaries are Previous year’s figures and phrases have been three elements of control. Consolidation of disclosed in Note 2.2 to the Financial Statements. re-arranged whenever necessary to conform to a subsidiary begins when the Group obtains current presentation. control over the subsidiary and ceases when 1.3 parent Enterprise and Ultimate Parent the Group looses control of the subsidiary. Enterprise 2.2 Basis of Consolidation Assets, liabilities, income and expenses of a The Company’s parent undertaking is The consolidated financial statements comprise subsidiary acquired or disposed of during the Softlogic Holdings PLC which is incorporated the financial statements of the Company and year are included in the consolidated financial and domiciled in Sri Lanka and listed on the Its Subsidiaries as at 31 March 2018. Control is statements from the date the Group gains Colombo Stock Exchange. achieved when the Group is exposed, or has control until the date the Group ceases to control rights, to variable returns from its involvement the subsidiary. 1.4 date of Authorisation for Issue with the investee and has the ability to affect The Financial Statement of Asiri Hospital those returns through its power over the Profit or loss and each component of other Holdings PLC and its Subsidiaries for year investee. Specifically, the Group controls an comprehensive income (OCI) are attributed to ended 31 March 2018 was authorised for issue investee if, and only if, the Group has: the equity holders of the parent of the Group in accordance with a resolution of the Board of and to the non-controlling interests, even if this Directors dated 29 June 2018. 1. Power over the investee (i.e., existing rights results in the non-controlling interests having a that give it the current ability to direct the deficit balance. When necessary, adjustments 2. significant Accounting Policies relevant activities of the investee) are made to the financial statements of 2.1 Basis of Preparation 2. Exposure, or rights, to variable returns from subsidiaries to bring their accounting policies The financial statements of the Company and its involvement with the investee into line with the Group’s accounting policies. All Group have been prepared on a historical cost 3. The ability to use its power over the investee intra-group assets and liabilities, equity, income, basis, unless otherwise indicated. to affect its returns expenses and cash flows relating to transactions between members of the Group are eliminated The financial statements are presented in Sri Generally, there is a presumption that a majority in full on consolidation. Lankan Rupees (Rs), unless otherwise indicated. of voting rights result in control. To support this 81 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an The total profits and losses for the year of the equity transaction in a separate component of equity i.e. Reserve on Consolidation. Company and Its Subsidiaries included in consolidation and all assets and liabilities of If the Group looses control over a subsidiary, it derecognises the related assets (including goodwill), the Company and Its Subsidiaries included in liabilities, non-controlling interest and other components of equity while any resultant gain or loss is consolidation are shown in the Consolidated recognised in profit or loss. Any investment retained is recognised at fair value. Statement of Profit or Loss, Statement of Comprehensive Income and Statement of Subsidiaries Financial Position respectively. Subsidiaries are those enterprises controlled by the parent. Control exists when the parent holds more than 50% of the voting rights or otherwise has a controlling interest. Minority interest which represents the portion of profit or loss and net assets not held by the The Financial Statements of the following subsidiary companies are included in the Consolidated Group, are shown as a component of profit Financial Statements. for the year in the Statement of Profit or Loss, Statement of Other Comprehensive Income and Company Effective Effective Principal Activities as a component of equity in the consolidated Holding Holding Statement of Financial Position, separately from 2018 2017 parent’s shareholders’ equity. Asiri Central 94.26% 94.16% The principal activities of the Company were The Consolidated Statement of Cash Flows Hospitals Ltd providing medical services. With the cessation includes the cash flows of the Company and Its of the medical services business operations, the Subsidiaries. Company operated as an investment company. Asiri Hospital Matara 100% 100% The principal activities of the Company are to Investment in Associates (Pvt) Ltd. operate a hospital and provide healthcare services. An associate is an entity over which the Company Asiri Diagnostics 66.54% 66.5% The principal activities of the Company are to carry has significant influence. Significant influence Services (Pvt) Ltd. out diagnostic laboratory services. is the power to participate in the financial and Asiri Hospital Kandy 100% 100% The principal activities of the Company are to operating policy decisions of the investee. (Pvt) Ltd. provide healthcare services. However, the company has not yet commenced its operations. The Group’s investment in its associate is Asiri Surgical 78.39% 73.68% The principal activities of the Company are to accounted for using the equity method. Hospital PLC operate a two tier hospital, and provide healthcare Under the equity method, the investment in services. an associate is initially recognised at cost. The carrying amount of the investment is adjusted to Central Hospital Ltd 99.73% 99.73% The principal activities of the Company are to recognise changes in the Group’s share of net operate a hospital and provide healthcare services. assets of the associate since the acquisition date. Asiri Laboratories 100% 100% The principal activities of the Company are to carry Goodwill relating to the associate is included in (Pvt) Ltd. out diagnostic laboratory services. the carrying amount of the investment and is not tested for impairment individually. Company was incorporated on 20 January 2016 under the Companies Act No. 07 of 2007 and has The statement of profit or loss reflects the not commenced its operations. Group’s share of the results of operations of 82 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements the associate. Any change in OCI of those accounting policies, the key assumptions In determining the temporary difference investees is presented as part of the Group’s made relating to the future and the sources of pertaining to property, plant and equipment, OCI. In addition, when there has been a change estimation at the reporting date together with management adapted a revised estimation recognised directly in the equity of the associate, the related judgments that have a significant risk technique to better reflect the related tax the Group recognises its share of any changes, of causing a material adjustment to the carrying consequence. (Refer Note 20) when applicable, in the statement of changes amounts of assets and liabilities within the next in equity. Unrealised gains and losses resulting financial year are discussed below. Defined Benefit Plans from transactions between the Company and The cost of the retirement benefit plan of the associate are eliminated to the extent of the Fair value of Property, Plant and Equipment employees is determined using an actuarial interest in the associate. The Group measures land and buildings at valuation. The actuarial valuation is based on revalued amounts with changes in fair value assumptions concerning the rate of interest, After application of the equity method, the being recognised in other comprehensive rate of salary increase, staff turnover, retirement Group determines whether it is necessary to income. Land and buildings were valued by age and going concern of the Group. Due to the recognise an impairment loss on its investment reference to market-based evidence, using long term nature of the plan, such estimates are in its associate. At each reporting date, the Group comparable prices adjusted for specific market subject to significant uncertainty. (Refer Note 21) determines whether there is objective evidence factors such as nature, location and condition of that the investment in the associate is impaired. If the property. Transfer Pricing Regulation there is such evidence, the Group calculates the The Company is subject to income taxes and amount of impairment as the difference between Fair value related disclosures for assets other taxes including transfer pricing regulations. the recoverable amount of the associate and its measured at fair value are summarised in the Prevailing uncertainties with respect to the carrying value, and then recognises the loss as Note 9.1.9 to the financial statements. interpretation of respective transfer pricing ‘Share of profit of an associate’ in the statement regulations, necessitated using management of profit or loss Deferred Tax Assets judgment to determine the impact of transfer Deferred tax assets are recognised for all unused pricing regulations. Accordingly critical Upon loss of significant influence over the tax losses to the extent that it is probable that judgments and estimates were used in applying associate, the Group measures and recognises taxable profit will be available against which the the regulations in aspects including but not any retained investment at its fair value. Any losses can be utilised. Significant management limited to identifying associated undertakings, difference between the carrying amount of the judgment is required to determine the amount estimation of the respective arm’s length prices associate upon loss of significant influence and of deferred tax assets that can be recognised, and selection of appropriate pricing mechanism. the fair value of the retained investment and based upon the likely timing and level of future The current tax charge is subject to such proceeds from disposal is recognised in profit or taxable profits together with future tax planning judgments. Differences between estimated loss. strategies. income tax charge and actual payable may arise as a result of management’s interpretation and 2.3 significant Accounting Judgments, The Company which is in the tax exemption application of transfer pricing regulation. Estimates and Assumptions period of Board of Investment of Sri Lanka The preparation of the financial statements of recognise deferred tax in their financial 2.4 summary of Significant Accounting the Group require the management to make statements, for temporary differences which will Policies judgments, estimates and assumptions, which reverse after the expiry of the tax holiday period. 2.4.1 Business Combination and Goodwill may affect the amounts of income, expenditure, Significant management judgment is required to Business combinations are accounted for assets , liabilities and the disclosure of determine the future tax implications arising from using the acquisition method. The cost of an contingent liabilities, at the end of the reporting particularly property, plant and equipment after acquisition is measured as the aggregate of period. In the process of applying the Group’s the expiration of the tax holiday. the consideration transferred measured at 83 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements acquisition date fair value and the amount of Transactions in foreign currencies are initially which sufficient data are available to measure any non-controlling interests in the acquiree. recorded by the Group/Company at the fair value, maximising the use of relevant For each business combination, the Group functional currency spot rate ruling at the date observable inputs and minimising the use of elects whether to measure the non-controlling the transaction first qualifies for recognition. unobservable inputs. interests in the acquiree at fair value or at Monetary assets and liabilities denominated the proportionate share of the acquiree’s in foreign currencies are retranslated at the All assets and liabilities for which fair value identifiable net assets. Acquisition-related functional currency rate of exchange ruling at is measured or disclosed in the Financial costs are expensed as incurred and included in the reporting date. Statements are categorised within the fair value administrative expenses. hierarchy, described as follows: Differences arising on settlement or translation of Goodwill is initially measured at cost, being the monetary items are recognised in profit or loss. Level 1 - Quoted (unadjusted) market prices in excess of the aggregate of the consideration active markets for identical assets or transferred and the amount recognised for Non monetary items that are measured in terms of liabilities. non-controlling interests, and any previous historical cost in a foreign currency are translated Level 2 - Valuation techniques for which the interest held, over the net identifiable assets using the exchange rates as at the dates of the lowest level input that is significant to acquired and liabilities assumed. If the fair value initial transactions. Non monetary items measured the fair value measurement is directly or of the net assets acquired is in excess of the at fair value in a foreign currency are translated indirectly observable. aggregate consideration transferred, the Group using the exchange rates at the date when the fair Level 3 - Valuation techniques for which the re-assesses whether it has correctly identified value was determined. The gain or loss arising on lowest level input that is significant all of the assets acquired and all of the liabilities translation of non-monetary items measured at fair to the fair value measurement is assumed and reviews the procedures used to value is treated in line with the recognition of gain unobservable. measure the amounts to be recognised at the or loss on change in fair value in the item (i.e., the acquisition date. If the reassessment still results translation differences on items whose fair value For assets and liabilities that are recognised in in an excess of the fair value of net assets gain or loss is recognised in other comprehensive the Financial Statements on a recurring basis, acquired over the aggregate consideration income (OCI) or profit or loss are also recognised the Group determines whether transfers have transferred, then the gain is recognised in profit in OCI or profit or loss, respectively). occurred between levels in the hierarchy by or loss. re-assessing categorisation (based on the lowest 2.4.3 Fair Value Measurement level input that is significant to the fair value After initial recognition, goodwill is measured at Fair value related disclosures for assets measurement as a whole) at the end of each cost less any accumulated impairment losses. measured at fair value or financial instruments reporting period. For the purpose of impairment testing, goodwill that are not measured at fair value, for which fair acquired in a business combination is, from values are disclosed, are summarised in the Note The management determines the policies the acquisition date, allocated to each of the 9.1.9 and 13 to the financial statements. and procedures for both recurring fair Group’s cash-generating units that are expected value measurement and for non- recurring to benefit from the combination, irrespective of The fair value of an asset or a liability is measured measurement. whether other assets or liabilities of the acquiree using the assumptions that market participants are assigned to those units. would use when pricing the asset or liability, For the purpose of fair value disclosures, assuming that market participants act in their the Group has determined classes of assets 2.4.2 Foreign Currency Translation economic best interest. and liabilities on the basis of the nature, The Financial Statements are presented in Sri characteristics and risks of the asset or liability Lankan Rupees, which is the Group’s functional The Group uses valuation techniques that and the level of the fair value hierarchy as and presentation currency. are appropriate in the circumstances and for explained above. 84 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

2.4.4 Revenue Recognition e) Other Income Inland Revenue Act relating to the imposition, Revenue is recognised to the extent that it is Other income is recognised on an accrual basis. payment and recovery of income tax shall not probable that the economic benefits will flow apply to the business operating a hospital and to the Group and the revenue can be reliably 2.4.5 Taxation providing healthcare services, for a period of 8 measured, regardless of when the payment Current Taxes years commencing from the year the Company is being made. Revenue is measured at the Current income tax assets and liabilities for the makes profits or any year of assessment not fair value of the consideration received or current and prior years are measured at the later than two years from the date on which the receivable, taking into account contractually amount expected to be recovered from or paid company commences commercial operations, defined terms of payment and excluding taxes to the taxation authorities. The tax rates and tax whichever is earlier. Accordingly, the exemption or duty. laws used to compute the amount are those is for a period of eight years commencing from that are enacted or substantively enacted, at the financial year 2012/ 2013. This exemption a) Sales of Goods reporting date. will expire on 31 March 2020. Immediately Revenue from the sale of goods is recognised following the afore mentioned tax exemption when the significant risks and rewards of Asiri Surgical Hospital PLC period, the Company's income tax on operating ownership of the goods have been transferred to Pursuant to the agreement dated 29 March 2000 profit shall be charged at a concessionary tax the buyer. entered into with the Board of Investment under rate of 15%. section 17 of the Board of Investment Law, the Revenue from the sale of goods is measured at Inland Revenue Act relating to the imposition, The Company is liable to pay tax on other the fair value of the consideration received or payment and recovery of income tax shall not income earned at the prevailing tax rate. receivable, net of returns and allowances, trade apply to the business of operating a two tier discounts and volume rebates hospital and providing healthcare services, for a Following Companies are liable to pay tax period of 10 years. on business and other income earned at the b) Rendering of Services prevailing tax rates. Revenue from rendering of services is The Company is liable to pay tax on other recognised in the accounting period in which income earned at the prevailing tax rate and on ee Asiri Hospital Holdings PLC the services are rendered or performed. business income from 01 January 2015 upon ee Asiri Surgical Hospital PLC expiry of exemption period which is 10 years ee Asiri Diagnostics Services (Pvt) Ltd c) Interest Income counted from the date on which the enterprise ee Asiri Hospital Matara (Pvt) Ltd For all financial instruments interest income first commences commercial operations (01 is recorded using effective interest rate, the January 2005). Deferred Taxation rate that exactly discounts the estimated Deferred tax is provided on temporary differences future receipts through the expected life of the Asiri Central Hospitals Ltd at the reporting date between the tax bases of financial instrument or a shorter period, where Income tax wholly represents tax on income assets and liabilities and their carrying amounts appropriate, to the net carrying amount of the derived from interest income. for financial reporting purposes at the reporting financial asset. Interest income is included in date. Deferred tax liabilities are recognised for finance income in the Statement of Profit or Loss. Central Hospital Ltd all taxable temporary differences. Deferred tax Pursuant to the agreement dated 9 November assets are recognised for all deductible temporary d) Dividend Income 2007 and supplementary agreement dated differences, the carry forward of unused tax Dividend income is recognised when the 14 February 2009 entered into with the credits and any unused tax losses. Deferred Group’s right to receive the payment is Board of Investment under section 17 of the tax assets are recognised to the extent that it established. Board of Investment Law No.4 of 1978, the is probable that taxable profit will be available 85 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements against which the deductible temporary and equipment are required to be replaced changing the amortisation period or method, differences, the carry forward of unused tax at intervals, the Group recognises such parts as appropriate, and treated as changes in credits and unused tax losses can be utilised. as individual assets with specific useful lives accounting estimates. and depreciates them accordingly. Likewise, The carrying amount of deferred tax assets is when a major inspection is performed, its cost Free hold land and building is subsequently reviewed at each reporting date and reduced is recognised in the carrying amount of the measured at fair value while other classes of to the extent that it is no longer probable that plant and equipment as a replacement if the property, plant and equipment are measured sufficient taxable profit will be available to allow recognition criteria are satisfied. All other repair using the cost model. all or part of the deferred tax asset to be utilised. and maintenance costs are recognised in the statement of profit or loss as incurred. Valuations are performed with sufficient Deferred tax assets and liabilities are measured frequency to ensure that the fair value of a at the tax rates that are expected to apply in the An item of Property, Plant and Equipment revalued asset does not differ materially from its year when the asset is realised or the liability is is derecognised upon disposal or when no carrying amount. settled, based on tax rates (and tax laws) that future economic benefits are expected from have been enacted or substantively enacted at its use or disposal. Any gain or loss arising on A revaluation surplus is recognised in other the reporting date. Unrecognised deferred tax derecognising of the asset (calculated as the comprehensive income and credited to the assets are reassessed at each reporting date and difference between the net disposal proceeds revaluation reserve in equity. However, to the are recognised to the extent that it has become and the carrying amount of the asset) is included extent that it reverses a revaluation deficit of probable that future taxable profits will allow the in the statement of profit or loss in the year the the same asset previously recognised in the deferred tax asset to be recovered. asset is derecognised. statement of profit or loss, such the increase is recognised in the statement of profit or loss. A Deferred tax relating to items recognised outside The asset's residual values, useful lives and revaluation deficit is recognised in profit or loss, statement of profit or loss is recognised outside methods of depreciation are reviewed, and except to the extent that it offsets an existing statement of profit and loss. Deferred tax items adjusted if appropriate, at each financial year surplus on the same asset recognised in the are recognised in correlation to the underlying end. revaluation reserve. transaction either in other comprehensive income or directly in equity. Capital expenditure incurred in relation to 2.4.7 Leases fixed assets which are not completed as at the The determination of whether an arrangement Deferred tax assets and deferred tax liabilities reporting date are shown as capital work-in- is, or contains, a lease is based on the substance are offset if a legally enforceable right exists to progress and is stated at cost. On completion, of the arrangement at the inception date. The set off current tax assets against current income the related assets are transferred to property, arrangement is assessed for whether fulfillment tax liabilities and the deferred taxes relate to plant and equipment. Depreciation on capital of the arrangement is dependent on the use of the same taxable entity and the same taxation work-in-progress commences when the assets a specific asset or assets or the arrangement authority. are ready for their intended use. conveys a right to use the asset or assets, even if that right is not explicitly specified in an 2.4.6 Property, Plant and Equipment Subsequent Measurement arrangement. Property, plant and equipment are initially Property, Plant and equipment is stated at cost stated at cost and such cost includes the or valuation, excluding the costs of day to day Company as a Lessee: cost of replacing parts of the property, plant servicing, less accumulated depreciation and Finance leases that transfer to the Company and equipment if the recognition criteria are accumulated impairment in value. Changes in substantially all of the risks and benefits met. When significant parts of property, plant the expected useful life are accounted for by incidental to ownership of the leased item, 86 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements are capitalised at the commencement of the as hedging instruments in an effective hedge, statement of profit or loss, or determined to be lease at the fair value of the leased property as appropriate. The Group determines the impaired, at which time the cumulative loss is or, if lower, at the present value of the classification of its financial assets at initial reclassified to the statement of profit or loss in minimum lease payments. Lease payments recognition. finance costs and removed from the available- are apportioned between finance charges and for-sale reserve. reduction of the lease liability so as to achieve All financial assets are recognised initially at a constant rate of interest on the remaining fair value plus transaction costs, in the case Trade and Other Receivables balance of the liability. Finance charges are of assets not at fair value through profit or Trade and other receivables are non-derivative recognised in finance costs in the statement of loss. Purchases or sales of financial assets financial assets with fixed or determinable profit or loss. that require delivery of assets within a time payments that are not quoted in an active frame established by regulation or convention market. After initial measurement, such financial A leased asset is depreciated over the useful life in the marketplace (regular way trades) are assets are subsequently measured at amortised of the asset. However, if there is no reasonable recognised on the trade date, i.e., the date that cost using the effective interest rate method certainty that the Company will obtain the Group commits to purchase or sell the (EIR), less impairment. The losses arising from ownership by the end of the lease term, the asset asset. impairment are recognised in the statement of is depreciated over the shorter of the estimated profit or loss. useful life of the asset and the lease term. The Group’s financial assets include cash and bank balances, Reverse Repurchase Derecognition Operating lease payments are recognised as an Agreements trade and other receivables which Financial Assets operating expense in the statement of profit or are classified as Loans and Receivables and A financial asset is primarily derecognised when: loss on a straight-line basis over the lease term. available-for-sale financial assets under LKAS 39. (a) The rights to receive cash flows from the 2.4.8 Borrowing Costs Subsequent Measurement asset have expired, or Borrowing Costs are recognised as an expense The subsequent measurement of financial (b) The Group has transferred its rights to in the period in which they are incurred except assets depends on their classification as receive cash flows from the asset or has borrowing costs directly attributable to the described below: assumed an obligation to pay the received acquisition, construction or production of cash flows in full. an asset that necessarily takes a substantial Available-for-Sale Financial Investments period of time to get ready for its intended use Available-for-sale financial investments include Impairment of Financial Assets or sale are capitalised as part of the cost of the equity securities. Equity investments classified The Group assesses, at each reporting date, respective assets. as available-for-sale are those, neither classified whether there is any objective evidence that a as held-for-trading nor designated at fair value financial asset or a group of financial assets is 2.4.9 Financial Instruments - Initial through profit or loss. impaired. A financial asset or a group of financial Recognition and Subsequent Measurement assets is deemed to be impaired if, and only if, i) Financial Assets After initial measurement, available-for-sale there is objective evidence of impairment as a Initial Recognition and Measurement financial investments are subsequently result of one or more events that has occurred Financial assets within the scope of LKAS measured at fair value with unrealised gains after the initial recognition of the asset (an 39 are classified as financial assets held or losses recognised as other comprehensive incurred ‘loss event’) and that loss event has an for trading, loans and receivables, held- income in the available-for-sale reserve until impact on the estimated future cash flows of the to-maturity investments, available-for-sale the investment is derecognised, at which time, financial asset or the group of financial assets financial assets, or as derivatives designated the cumulative gain or loss is recognised in that can be reliably estimated. 87 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

Evidence of impairment may include impairment, the cumulative loss measured as statement of profit or loss when the liabilities are indications that the debtors or a group of the difference between the acquisition cost and derecognised as well as through the effective debtors is experiencing significant financial the current fair value, less any impairment loss interest rate method (EIR) amortisation process. difficulty, default or delinquency in payments, on that investment previously recognised in the Amortised cost is calculated by taking into the probability that they will enter bankruptcy statement of profit or loss is removed from other account any discount or premium on acquisition or other financial reorganisation and where comprehensive income and recognised in the and fees or costs that are an integral part of the observable data indicate that there is a statement of profit or loss. Impairment losses on EIR. measurable decrease in the estimated future equity investments are not reversed through the cash flows, such as changes in arrears or statement of profit or loss; increases in their fair Financial Guarantee Contracts economic conditions that correlate with value after impairment are recognised directly in Financial guarantee contracts issued by defaults. other comprehensive income. the Group are those contracts that require a payment to be made to reimburse the holder Financial Assets Carried at Amortised Cost ii) Financial Liabilities for a loss it incurs because the specified debtor The carrying amount of the asset is reduced Initial Recognition and Measurement fails to make a payment in accordance with the through the use of an allowance account and Financial liabilities within the scope of LKAS terms of a debt instrument. Financial guarantee the amount of the loss is recognised in the 39 are classified as financial liabilities at contracts are recognised initially as a liability statement of profit or loss. The assets are written fair value through profit or loss, loans and at fair value, adjusted for transaction costs that off when there is no realistic prospect of future borrowings, or as derivatives designated as are directly attributable to the issuance of the recovery. If, in a subsequent year, the amount hedging instruments in an effective hedge, guarantee. of the estimated impairment loss increases or as appropriate. The Group determines the decreases because of an event occurring after classification of its financial liabilities at initial Subsequently, the liability is measured at the the impairment was recognised, the previously recognition. higher of the best estimate of the expenditure recognised impairment loss is increased or required to settle the present obligation at the reduced by adjusting the allowance account. The Group's financial liabilities include trade reporting date and the amount recognised less If a write off is later recovered, the recovery is and other payables, bank overdrafts, loans and cumulative amortisation. credited to the statement of profit or loss. borrowings, financial guarantees contracts, and other financial liabilities. 2.4.10 Inventories Available-for-Sale Financial Instruments Inventories are valued at the lower of cost For available-for-sale financial investments, the Financial liabilities are recognised initially at fair and net realisable value, after making due Group assesses at each reporting date whether value plus, in the case of loans and borrowings, allowances for obsolete and slow moving there is objective evidence that an investment or directly attributable transaction costs. items. Net realisable value is the price at which a group of investments is impaired. inventories can be sold in the ordinary course Subsequent Measurement of business. In the case of equity investments classified as The measurement of financial liabilities depends available-for-sale, objective evidence would on their classification as follows: The cost incurred in bringing inventories to its include a significant or prolonged decline in present location and conditions are accounted the fair value of the investment below its cost. Interest Bearing Loans and Borrowings on First-in First-out basis. 'Significant is evaluated against the original cost After initial recognition, interest bearing loans of the investment and 'prolonged ‘against the and borrowings are subsequently measured at 2.4.11 Impairment of Non-Financial Assets period in which the fair values has been below amortised cost using the effective interest rate The Group assesses at each reporting date its original cost. Where there is evidence of method. Gains and losses are recognised in the whether there is an indication that an asset 88 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements may be impaired. If any indication exists, or joint venture. Joint control is the contractually The aggregate of the Group’s share of profit or when annual impairment testing for an asset agreed sharing of control of an arrangement, loss of an associate and a joint venture is shown is required, the Group estimates the asset's which exists only when decisions about the on the face of the Statement of Profit or Loss recoverable amount. An asset's recoverable relevant activities require unanimous consent of outside operating profit and represents profit or amount is higher of asset's fair value less costs the parties sharing control. loss after tax and non-controlling interests in the to sell and its value in use. It is determined subsidiaries of the associate or joint venture. for an individual asset, unless the asset does The considerations made in determining not generate cash inflows that are largely significant influence or joint control is similar The Financial Statements of the associate independent of those from other assets or to those necessary to determine control over or joint venture are prepared for the same groups of assets. subsidiaries. reporting period as the Group. When necessary, adjustments are made to bring the accounting Where the carrying amount of an asset exceeds The Group’s investments in its associates and policies in line with those of the Group. its recoverable amount, the asset is considered joint venture are accounted for using the equity impaired and is written down to its recoverable method. After application of the equity method, the amount. Group determines whether it is necessary to Under the equity method, the investment in an recognise an impairment loss on its investment 2.4.12 Cash and Cash Equivalents associate or a joint venture is initially recognised in its associate or joint venture. At each reporting Cash and Cash Equivalents are defined as cash at cost. The carrying amount of the investment date, the Group determines whether there is in hand, demand deposits and short-term highly is adjusted to recognise changes in the Group’s objective evidence that the investment in the liquid investments, readily convertible to known share of net assets of the associate or joint venture associate or joint venture is impaired. If there amounts of cash and subject to insignificant risk since the acquisition date. Goodwill relating to is such evidence, the Group calculates the of changes in value. the associate or joint venture is included in the amount of impairment as the difference between carrying amount of the investment and is not the recoverable amount of the associate or For the purpose of Cash Flow Statement, Cash tested for impairment separately. joint venture and its carrying value, and then and Cash Equivalents consist of the above net of recognises the loss as ‘Share of profit or loss of outstanding bank overdrafts. Investments with The Statement of Profit or Loss reflects the equity accounted investees’ in the Statement of short maturities (i.e. three months or less from Group’s share of the results of operations of the Profit or Loss. the date of acquisition) are also treated as Cash associate or joint venture. Any change in Other Equivalents. Comprehensive Income of those investees Upon loss of significant influence over is presented as part of the Group’s Other the associate or joint control over the joint 2.4.13 Equity Accounted Investees Comprehensive Income. In addition, when venture, the Group measures and recognises (Investment in Associates and Joint Ventures) there has been a change recognised directly any retained investment at its fair value. Any An associate is an entity over which the Group in the equity of the associate or joint venture, difference between the carrying amount of the has significant influence. Significant influence the Group recognises its share of any changes, associate or joint venture upon loss of significant is the power to participate in the financial and when applicable, in the Statement of Changes influence or joint control and the fair value of the operating policy decisions of the investee, but is in Equity. Unrealised gains and losses resulting retained investment and proceeds from disposal not control or joint control over those policies. from transactions between the Group and the is recognised in the Statement of Profit or Loss. associate or joint venture are eliminated to the A joint venture is a type of joint arrangement extent of the interest in the associate or joint In the separate financial statements of the whereby the parties that have joint control of the venture. Asiri Hospital Holdings PLC, equity accounted arrangement have rights to the net assets of the investees are recognised at cost. 89 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

2.4.14 Provisions The Group’s accounting policy for defined SLFRS 9 - Financial Instruments Provisions are recognised when the Group benefit plans is to recognise actuarial gains and SLFRS 9 replaces the existing guidance in has a present obligation (legal or constructive) losses in the period in which they occur in full in LKAS 39 Financial Instruments: Recognition as a result of a past event, where it is probable the Statement of Other Comprehensive Income. and Measurement. SLFRS 9 includes revised that an outflow of resources embodying The gratuity liability is not funded. guidance on the classification and measurement economic benefits will be required to settle of financial instruments, a new expected the obligation and a reliable estimate can be b) Defined Contribution Plans: credit loss model for calculating impairment made of the amount of the obligation. When Employees’ Provident Fund and Employee' on financial assets, and new general hedge the Group expects some or all of a provision Trust Fund accounting requirements. It also carries forward to be reimbursed, the reimbursement is Employees are eligible for Employees' Provident the guidance on recognition and derecognition recognised as a separate asset but only when Fund and Employee' Trust Fund contributions, of financial instruments from LKAS 39. the reimbursement is virtually certain. The in line with respective statute and regulations. expense relating to any provision is presented The Group contributes 12% and 3% of gross SLFRS 9 is effective for annual reporting periods in the Statement of Profit or Loss net of any remuneration of employees to Employees' beginning on or after 1 January 2018, with early reimbursement. Provident Fund and Employee' Trust Fund. adoption permitted.

2.4.15 Post Employment Benefits 2.4.16 Segment Reporting SLFRS 15 - Revenue from Contracts with a) Defined Benefit Plan – Gratuity An operating segment is a component of the Customers The Group measures the present value of the Group that engages in business activities from SLFRS 15 establishes a comprehensive promised retirement benefits of gratuity which which it may earn revenues and incur expenses, framework for determining whether, how much is a defined benefit plan with the advice of an including revenues and expenses that relate to and when revenue is recognised. It replaces independent professional actuary at the end of transactions with any of the Company’s other existing revenue recognition guidance, including every financial year using the Projected Unit Credit components. All operating segments’ operating LKAS 18 Revenue, LKAS 11 Construction Method (PUC) as recommended by LKAS 19 – results are reviewed regularly by the Senior Contracts and IFRIC 13 Customer Loyalty “Employee benefits”. Accordingly, the employee Management Committee to make decisions Programmes. benefit liability is based on the actuarial valuation about resources to be allocated to the segment carried out by Messrs Actuarial and Management and assess its performance, and for which SLFRS 15 is effective for annual reporting Consultants (Pvt) Ltd, Actuaries. The actuarial discrete financial information is available. periods beginning on or after 1 January 2018, valuation involves making assumptions about with early adoption permitted. discount rate, future salary increase rate and 2.5 standards Issued but not yet Effective mortality rates etc. All assumptions are reviewed Standards issued but not yet effective up to Pending the completion of the detailed impact at each reporting date. the date of issuance of the Group’s financial analysis, possible Impact from SLFRS 9 and statements are listed below. This listing of SLFRS 15 is not reasonably estimable as of the Provision has been made for retirement gratuities standards and interpretations issued are those reporting date. from the beginning of service for all employees, that the Group reasonably expects to have an` in conformity with LKAS 19 on employee benefit. impact on disclosures, financial position or SLFRS 16 - Leases However, under the Payment of Gratuity Act No. performance when applied at a future date. The SLFRS 16 provides a single lessee accounting 12 of 1983, the liability to an employee arises Group intends to adopt these standards when model, requiring leases to recognise assets only on completion of 5 years of continued they become effective. and liabilities for all leases unless the lease service. term is 12 months or less or the underlying 90 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements asset has a low value even though lessor IFRIC Interpretation 23 Uncertainty over accounting remains similar to current practice. Income Tax Treatment This supersedes: LKAS 17 Leases, IFRIC 4 The Interpretation addresses the accounting determining whether an arrangement contains for income taxes when tax treatments involve a Lease, SIC 15 Operating Leases- Incentives; uncertainty that affects the application of LKAS and SIC 27 evaluating the substance of 12 and does not apply to taxes or levies outside Transactions Involving the Legal form of a the scope of LKAS 12, nor does it specifically Lease. Earlier application is permitted for include requirements relating to interest entities that apply SLFRS 15 Revenue from and penalties associated with uncertain tax Contracts with customers. treatments.

SLFRS 16 is effective for annual reporting The Interpretation specifically addresses the periods beginning on or after 1 January 2019, following: with early adoption permitted. ee Whether an entity considers uncertain tax SLFRS 2 Classification and Measurement treatments separately of Share-based Payment Transactions - ee The assumptions an entity makes about the Amendments to SLFRS 2 examination of tax treatments by taxation CA Sri Lanka issued amendments to SLFRS authorities 2 Share-based Payment that address three ee How an entity determines taxable profit (tax main areas: the effects of vesting conditions loss), tax bases, unused tax losses, unused on the measurement of a cash-settled share- tax credits and tax rates based payment transaction; the classification ee How an entity considers changes in facts of a share-based payment transaction with and circumstances net settlement features for withholding tax obligations; and accounting where a An entity must determine whether to consider modification to the terms and conditions of a each uncertain tax treatment separately or share-based payment transaction changes its together with one or more other uncertain tax classification from cash settled to equity settled. treatments. The approach that better predicts the resolution of the uncertainty should be On adoption, entities are required to apply the followed. The interpretation is effective for amendments without restating prior periods, but annual reporting periods beginning on or after retrospective application is permitted if elected 1 January 2019, but certain transition reliefs are for all three amendments and other criteria available. The Company will apply interpretation are met. The amendments are effective for from its effective date. annual periods beginning on or after 1 January 2018, with early application permitted. The Group is assessing the potential effect of the amendments on its financial statements. 91 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

3. revenue and Other Income

GROUP COMPANY 2018 2017 2018 2017 Year ended 31 March 2018 rs. Rs. Rs. Rs.

3.1 Revenue Healthcare Services 11,270,200,187 9,794,482,458 3,571,529,796 3,114,964,616 Sale of Goods 754,977,663 601,736,608 160,373,249 124,869,156 12,025,177,850 10,396,219,066 3,731,903,045 3,239,833,772

3.1.a Segment Information The Senior Management Committee is the Chief Operating Decision Maker (CODM) and monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on revenue and other income generated and is measured consistently with revenue and other income in the consolidated financial statements.

The Group has identified the following segments based on the information provided to CODM for the purpose of making decisions about resource allocation and performance assessment. ee Pre care which include OPD revenue, channeling revenue and OPD lab investigation services ee Post care which include all IPD revenue including inpatient drugs and lab investigation ee Pharmaceutical which includes OPD pharmacy revenue

The following table presents the revenue and other income generated by the Group’s segments for the year ended 31 March 2018 and comparative figures for the year ended 31 March 2017.

GROUP 2017/18 2016/17 Rs. Rs.

Pre care 2,293,924,114 2,102,715,528 Post Care 8,976,276,073 7,691,766,930 Pharmaceutical 754,977,663 601,736,608 12,025,177,850 10,396,219,066 92 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

3. revenue and Other Income (Contd..) 3.2 other Income

GROUP COMPANY 2018 2017 2018 2017 Year ended 31 March 2018 rs. Rs. Rs. Rs.

Rental Income 51,552,362 41,984,775 1,800,000 1,525,000 Other Laboratory Income 89,715,873 97,660,568 89,715,873 97,660,568 Profit on Sale of Property, Plant and Equipment 267,169 1,115,543 - - Dividend Income 21,914,587 18,893,669 746,668,318 947,652,238 Sundry Income 3,034,491 18,825,695 41,753 2,068,706 Gain on Investments 558,894,490 - 558,894,490 - Share Disposal Gain 185,500,000 - - - 910,878,971 178,480,250 1,397,120,434 1,048,906,512

4. finance Cost and Income

GROUP COMPANY 2018 2017 2018 2017 Year ended 31 March 2018 rs. Rs. Rs. Rs.

4.1 finance Cost Interest Expense on Borrowings 863,668,922 829,953,372 592,308,038 529,352,269 Interest Expense on Inter Company Borrowings - - 313,966,409 247,466,750 Bank Charges on Interest Bearing Loans 5,837,557 4,913,193 3,202,991 2,095,132 Guarantee Expense - - 11,649,946 25,071,759 869,506,478 834,866,565 921,127,384 803,985,910

4.2 finance Income Interest Income 63,105,726 30,907,275 17,658,567 768,134 Guarantee Income - - 24,505,731 17,727,698 Exchange Gain on Foreign Currency 2,685,297 468,459 - - 65,791,023 31,375,734 42,164,298 18,495,832 93 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

5. profit Before Tax

GROUP COMPANY 2018 2017 2018 2017 rs. Rs. Rs. Rs.

Stated after Charging Included in Cost of Sales Depreciation 465,601,745 411,037,175 56,425,792 54,392,233 Employee benefits including the following 2,298,624,028 2,053,065,834 684,145,081 605,435,464 - Defined Contribution Plan Costs - EPF and ETF 188,556,080 168,883,702 56,047,988 49,558,194

Included in Administrative Expenses Depreciation 397,329,504 373,706,993 88,008,702 68,817,778 Employee Benefits including the following 778,872,821 697,802,592 230,012,920 187,498,213 - Defined Benefit Plan Costs - Gratuity 98,009,559 80,844,508 36,787,485 30,353,674 - Defined Contribution Plan Costs - EPF and ETF 45,785,142 43,520,460 12,002,454 10,812,441 Directors' Fees and Remuneration 43,475,500 42,840,000 37,055,500 21,579,356 Amortisation of Leasehold Property 53,797,500 3,526,646 - - Donations 8,507,341 8,447,504 7,528,890 6,951,500 Legal Fees 5,529,949 12,824,914 1,793,412 957,100 Audit Fees and Reimbursable expense 4,925,820 4,935,587 1,980,000 1,800,000

Included in Selling and Distribution Costs Advertising Expenses 90,935,395 71,781,874 22,700,677 18,253,406 Impairment of Trade Debtors 21,810,580 12,532,473 3,623,178 329,282 94 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

6. income Tax The Major Components of Income Tax Expense for the years ended 31 March are as follows :

GROUP COMPANY 2018 2017 2018 2017 rs. Rs. Rs. Rs.

Current Income Tax Current Income Tax charge 402,729,404 168,904,344 208,393,449 57,840,182 Under/(Over) Provision in Respect of Previous Years 36,621,387 (6,714,508) (49,809) (7,791,036) 10 % Withholding Tax on Inter Company Dividends 81,668,708 102,508,943 - -

Deferred Income Tax Deferred Taxation Charge/(Reversal) 178,547,932 (87,492,794) 92,070,333 7,731,100 Income Tax Expense Reported in the Statement of Profit or Loss 699,567,431 177,205,985 300,413,973 57,780,246

Deferred Income Tax Deferred Taxation Charge (969,400,381) 28,770,502 468,465,233 4,637,793 Income Tax Expense Reported in the Statement of Other Comprehensive Income (969,400,381) 28,770,502 468,465,233 4,637,793

A Reconciliation between Tax Expense and Accounting Profit Accounting Profit Before Tax 2,599,631,512 1,297,208,097 1,558,550,424 1,239,780,717 Disallowable Expenses 807,440,045 849,706,723 427,344,374 423,516,185 Deductible Expenses (627,570,063) (562,604,395) (242,416,171) (206,205,252) Income not Liable for Tax - (35,652,620) (771,174,049) (963,858,099) Profit Exempt from Tax (802,660,621) (396,683,694) - - Assessable Income 1,976,840,873 1,151,974,111 972,304,578 493,233,551 Qualifying Payments (68,020,289) (68,020,289) (3,662,250) (11,232,031) Tax Losses Brought Forward and Utilised (22,757,931) (22,757,931) - - Taxable Profit 1,886,062,653 1,061,195,891 968,642,328 482,001,520

Statutory Tax Rate Income Tax Rate 12% 12% 12% 12% Income Tax Rate on Other Income 28% 28% 28% 28%

Income Tax -2018-12% (2017 - 12%) 114,095,990 100,764,114 47,206,967 57,840,182 Income Tax - 2018- 28% (2017- 28%) 288,633,414 68,140,230 161,186,482 - Current Income Tax charge 402,729,404 168,904,344 208,393,449 57,840,182 95 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

7. earnings Per Share Basic Earnings Per Share is calculated by dividing the net profit for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. The weighted average number of ordinary shares outstanding during the year and the previous year are adjusted for events that have changed the number of ordinary shares outstanding, without a corresponding change in the resources such as a bonus issue.

Diluted Earnings Per Share is calculated by dividing the net profit for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year after adjustment for the effect of all diluted potential ordinary shares. There were no potentially diluted ordinary shares outstanding at any time during the year/previous year.

The following reflects the income and share data used in the Basic Earnings Per Share computations.

GROUP COMPANY 2018 2017 2018 2017 rs. Rs. Rs. Rs.

Profit Attributable to Ordinary Shareholders for Basic Earnings Per Share 1,738,518,587 1,028,018,555 1,258,136,453 1,182,000,471 1,738,518,587 1,028,018,555 1,258,136,453 1,182,000,471

COMPANY 2018 2017

Number of Ordinary Shares used as the Denominator Weighted Average Number of Ordinary Shares in Issue Applicable to Basic/Diluted Earnings Per Share 1,137,533,596 1,137,533,596

8. dividends Paid and Proposed Declared and Paid During the Year

COMPANY 2018 2017 Rs. Rs.

Equity Dividends on Ordinary Shares : - Final Dividend for 2017/2018 : Rs. 0.60 ) 682,520,158 1,080,656,916 (Final Dividend for 2015/2016 : Rs. 0.45 per share and Interim 2016/17: 0.50) 682,520,158 1,080,656,916 96 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

9. property, Plant and Equipment 9.1 GROUP 9.1.1 Gross Carrying Amounts at Cost or Valuation

Balance Additions/ Revaluation disposals/ Balance As at Transfers Transfers As at 01.04.2017 31.03.2018 Rs. Rs. Rs. Rs. Rs.

Land 3,195,575,000 575,312,698 839,312,302 - 4,610,200,000 Buildings 6,693,555,999 57,706,578 27,987,922 - 6,779,250,499 Furniture and Fittings 1,287,467,029 105,960,437 - (34,687,673) 1,358,739,793 Medical Equipment 4,986,416,824 521,424,356 - (180,439,934) 5,327,401,246 Motor Vehicles 141,107,060 39,050,000 - (9,562,610) 170,594,450 Sundry Equipment 1,070,276,260 137,591,969 - (44,019,215) 1,163,849,014 17,374,398,172 1,437,046,038 867,300,224 (268,709,431) 19,410,035,002

Assets on Finance Lease Motor Vehicles 92,500,000 - - - 92,500,000

Capital Work in Progress Work-in-Progress 1,227,899,353 1,252,471,615 - (13,572,863) 2,466,798,105 1,227,899,353 1,252,471,615 - (13,572,863) 2,466,798,105 Total Value of Assets 18,694,797,525 2,689,517,653 867,300,224 (282,282,295) 21,969,333,107

9.1.2 Accumulated Depreciation Balance charge for revaluation disposals/ Balance As at the year Transfers As at 01.04.2017 31.03.2018 Rs. Rs. Rs. Rs. Rs.

Buildings - 136,584,056 (136,584,056) - - Furniture and Fittings 789,300,362 113,575,786 - (23,869,128) 879,007,020 Medical Equipment 2,712,727,526 465,601,745 - (128,668,878) 3,049,660,393 Motor Vehicles 44,429,987 20,201,399 - (5,458,311) 59,173,075 Sundry Equipment 767,126,919 114,725,802 - (42,141,302) 839,711,419 4,313,584,793 850,688,787 (136,584,056) (200,137,619) 4,827,551,907

Assets on Finance Lease Motor Vehicles 11,191,324 12,242,461 - - 23,433,785 Total Depreciation 4,324,776,117 862,931,249 (136,584,056) (200,137,619) 4,850,985,692 97 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

9.1.3 Net Book Values

2018 2017 Rs. Rs.

Land 4,610,200,000 3,195,575,000 Buildings 6,779,250,499 6,693,555,999 Furniture and Fittings 479,732,773 498,166,667 Medical Equipment 2,277,740,853 2,273,689,298 Motor Vehicles 111,421,375 96,677,073 Sundry Equipment 324,137,595 303,149,340 14,582,483,095 13,060,813,378

Asset on Finance Lease Motor Vehicles 69,066,215 81,308,676

Capital Work in Progress Work-in-Progress 2,466,798,105 1,227,899,353 Total Carrying Amount of Property, Plant and Equipment 17,118,347,414 14,370,021,407

9.1.4 During the year, the Group acquired Property, Plant and Equipment to the aggregate value of Rs. 2,689,517,653/- (2017 - Rs.2,163,678,543/-). Cash payments amounting to Rs 2,689,517,653/-(2017 - Rs. 2,152,968,544/-) were made during the year for purchase of Property, Plant and Equipment.

Group has capitalised the 100% of the borrowing cost incurred on Asiri Hospital Kandy (Private) Limited project amounting to Rs. 255 Mn as at 31/3/2018. ( 2017 - Rs. 216 Mn) which is included under Acquisition of PPE of the Cash Flow statement.

9.1.5 Group Property, Plant and Equipments with a carrying value of Rs. 7,800,400/- (2017 - Rs. 6,410,075,000./-) have been pledged as security for term loans obtained , details of which are disclosed in Note 26.

9.1.6 Group's Property, Plant & Equipment include fully depreciated assets which are still in use, the cost of which at the reporting date amounted to Rs. 2,052 Mn (2017 - Rs. 1,249 Mn). 98 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

9. property, Plant and Equipment (Contd..) 9.1.7 The provision for depreciation is calculated by using a straight line method on the cost/revaluation of all Property, Plant and Equipment in order to write off such amounts over the following estimated useful lives by equal installments.

Group/Company 2017/18

Buildings Over 60 Years Furniture and Fittings Over 10 Years Medical Equipment Over 10 Years Motor Vehicles Over 5-8 Years Sundry Equipment Over 2-10 Years

9.1.8 The carrying amount of revalued assets that would have been included in the financial statements had the assets been carried at cost less depreciation is as follows:

Cost cumulative net Carrying net Carrying Depreciation Amount Amount if Assets were 2018 2017 carried at Cost Rs. Rs. Rs. Rs.

Class of Asset Freehold Land 1,423,589,466 - 1,423,589,466 848,276,768 Building 4,432,773,331 899,202,714 3,533,570,617 3,593,311,458 5,856,362,797 899,202,714 4,957,160,083 4,441,588,226 99 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

9.1.9 The following properties are fair valued and recorded under freehold land and buildings. Fair Value measurement disclosure for revalued land and buildings based on un-observable inputs are as follows;

Company Location Extent Independent Effective Valuation Significant Range Fair Value Valuer Date of Details Unobservable Measurement Valuation Input (Level 3) Rs. Rs. Asiri Hospital No 181, 1 A 2 R 13.98 P P B 31 March Land - Market based Land price per 9,000,000 to 2,390,000,000 Holdings PLC Kirula Road, 2 Buildings Kalugalagedara 2018 evidence perch 10,000,000 Colombo 05 96,657 square & Associates Buildings - Direct Building value per 2,000 to 739,000,000 feet Capital Comparison square feet 16,000 Method using Depreciated Replacement Cost Asiri Surgical No 21, 3 Buildings P B 31 March Buildings - Direct Building value per 3,000 to 8,250 2,213,250,500 Hospital PLC Kirimandala 368,123 square Kalugalagedara 2018 Capital Comparison square feet Mawatha, feet & Associates Method using Narahenpita Depreciated Replacement Cost Asiri Hospital No 15, 1 A 2 R 1.3 P P B 31 March Land - Market based Land price per 1,000,000 150,000,000 Matara (Pvt) Dharmapala 2 Buildings Kalugalagedara 2018 evidence perch - Frontage Ltd Mawatha, 76,591 square & Associates Land price per 700,000 63,900,000 Uyanwatta feet perch - Rear Land Buildings - Direct Site improvement 15,000,000 Capital Comparison Building value per 600 to 8,000 407,900,000 Method using square feet Depreciated Replacement Cost Central No 114, 1 A 21.03 P P B 31 March Land - Market based Land price per 11,000,000 1,991,300,000 Hospital Ltd Norris 1 Buildings Kalugalagedara 2018 evidence perch Canal Road, 485,829 square & Associates Buildings - Direct Building value per 2,000 to 3,419,100,000 Colombo 10 feet Capital Comparison square feet 10,000 Method using Depreciated Replacement Cost

The surplus arising from the revaluation net of deferred tax is recognised in the Other Comprehensive Income and transferred to Revaluation Reserve in Equity.

Significant increases (decreases) in estimated price per perch/ building value per square feet in isolation would result in a significantly higher (lower) fair value. 100 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

9. property, Plant and Equipment (Contd..) Comparative Information 9.1.10 The following properties are fair valued and recorded under freehold land and buildings. Fair Value measurement disclosure for revalued land and buildings based on un-observable inputs are as follows;

Company Location Extent Independent Effective Valuation Significant Range Fair Value Valuer Date of Details unobservable Rs. measurement Valuation input (Level 3) Rs. Asiri Hospital No 1 A 30.21 P P B 31 March Land - Market Land price per 7,500,000 1,362,075,000 Holdings 181,Kirula 2 Buildings Kalugalagedara 2017 based evidence perch PLC Road , 96,657 & Associates Buildings - Direct Building value 2,000 to 710,556,000 Colombo 05 square feet Capital Comparison per square feet 16,000 Method using Depreciated Replacement Cost Asiri Surgical No 21, 3 Buildings P B 31 March Buildings - Direct Building value 3,000 to 2,161,000,000 Hospital PLC Kirimandala 368,123 Kalugalagedara 2017 Capital Comparison per square feet 8,000 Mawatha, square feets & Associates Method using Narahenpita Depreciated Replacement Cost Asiri Hospital No 15, 1 A 2 R 1.5 P P B 31 March Land - Market Land price 900,000 135,000,000 Matara (Pvt) Dharmapala 2 Buildings Kalugalagedara 2017 based evidence per perch - Ltd Mawatha, 77,695 & Associates Frontage Uyanwatta square feets Land price per 600,000 59,475,000 perch - Rear Land Buildings - Direct Site 10,000,000 Capital Comparison improvement Method using Buidling value 2,000 to 403,000,000 Depreciated per square feet 8,000 Replacement Cost Central No 114, 1 A 21.03 P P B 31 March Land - Market Land price per 9,000,000 1,629,000,000 Hospital Ltd Norris 1 Buildings Kalugalagedara 2017 based evidence perch Canal Road, 485,829 & Associates Buildings - Direct Buidling value 2,000 to 3,419,000,000 Colombo 10 square feets Capital Comparison per square feet 10,000 Method using Depreciated Replacement Cost 101 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

9.2 Company 9.2.1 Gross Carrying Amounts

Balance Additions/ Revaluation disposals/ Balance As at Transfers Transfers As at 01.04.2017 31.03.2018 Rs. Rs. Rs. Rs. Rs.

At Cost or Valuation Land 1,362,075,000 575,312,698 452,612,302 - 2,390,000,000 Buildings 710,556,000 40,825,977 (12,381,990) - 738,999,987 Medical Equipment 841,482,848 99,142,652 - (15,964,910) 924,660,590 Furniture and Fittings 173,696,941 52,799,668 - (7,064,021) 219,432,588 Motor Vehicles 55,118,807 17,300,000 - (7,677,610) 64,741,197 Sundry Equipment 317,049,204 69,766,016 - (2,228,728) 384,586,492 3,459,978,800 855,147,011 440,230,312 (32,935,269) 4,722,420,854

Assets on Finance Lease Motor Vehicles 63,800,000 - - - 63,800,000

In the Course of Construction Buildings Work-in-Progress 4,060,875 60,367,701 - - 64,428,576 Total Value of Assets 3,527,839,675 915,514,712 440,230,312 (32,935,269) 4,850,649,430

9.2.2 Depreciation

Balance charge for revaluation disposals/ Balance As at the year Transfers As at 01.04.2017 31.03.2018 Rs. Rs. Rs. Rs. Rs.

Buildings - 18,688,717 (18,688,717) - - Medical Equipment 570,753,671 56,425,792 - (15,850,523) 611,328,940 Furniture and Fittings 45,720,986 19,471,271 - (2,860,882) 62,331,375 Motor Vehicles 17,850,815 5,413,755 - (3,826,450) 19,438,119 Sundry Equipment 185,505,128 37,932,498 - (1,347,062) 222,090,564 819,830,600 137,932,033 (18,688,717) (23,884,917) 915,188,998

Assets on Finance Lease Motor Vehicles 6,316,251 6,502,461 - - 12,818,712 Total Depreciation 826,146,851 144,434,494 (18,688,717) (23,884,917) 928,007,710 102 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

9. property, Plant and Equipment (Contd..) 9.2.3 Net Book Values 2018 2017 Rs. Rs.

Land 2,390,000,000 1,362,075,000 Buildings 738,999,987 710,556,000 Medical Equipment 313,331,650 270,729,177 Furniture and Fittings 157,101,213 127,975,955 Motor Vehicles 45,303,078 37,267,992 Sundry Equipment 162,495,928 131,544,076 3,807,231,856 2,640,148,200

Assets on Finance Lease Motor Vehicles 50,981,288 57,483,749

In the Course of Construction Buildings Work-in-Progress 64,428,576 4,060,875 Total Value of Assets 3,922,641,720 2,701,692,823

9.2.4 During the year, the Company acquired Property, Plant and Equipment to the aggregate value of Rs.915,514,715/- (2017 - Rs.539,934,267/-). Cash payments amounting to Rs.915,514,715/- (2017 - Rs.534,579,257/-) were made during the year for purchase of Property, Plant and Equipment.

9.2.5 Company's fixed assets include fully depreciated assets, which are still in use the cost of which at the reporting date amounted to Rs. 607 Mn (2017 - Rs. 391 Mn).

9.2.6 Fair Value measurement disclosures relating to the properties which has been fair valued and recorded under freehold land and buildings are indicated in Note 9.1.9 to Financial Statements.

9.2.7 The carrying amount of revalued assets that would have been included in the Financial Statements had the assets been carried at cost less depreciation is as follows: (Refer Note 9.1.7 for depreciation rates of the Company).

Cost cumulative net Carrying net Carrying Depreciation Amount Amount if Assets were 2018 2017 carried at Cost Rs. Rs. Rs. Rs.

Class of Asset Freehold Land 776,184,698 - 776,184,698 200,872,000 Building 519,604,724 134,476,740 385,127,983 356,725,490 1,295,789,422 134,476,740 1,161,312,681 557,597,490 103 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

10. leasehold Property

GROUP 2018 2017 Rs. Rs.

Balance as at the Beginning of the Year 971,366,000 973,973,821 Leasehold Additions During the Year - 918,825 Amortisation for the Year (53,797,500) (3,526,646) Balance as at the End of the Year 917,568,500 971,366,000

10.1 Leasehold Property as at 31 March 2018 consists of the below; a. Asiri Surgical Hospital PLC obtained leasehold right to the land (extent of land 2 Acres, 1 Root and 11.6 perches) situated at No.21, Kirimandala Mawatha, Colombo 05 for 99 years from the Board of Investment of Sri Lanka by agreement dated 29 March 2000.

Asiri Surgical Hospital PLC has accounted for leasehold right comply with the Statement of Recommended Practices (SoRP) issued by Institute of Chartered Accountants of Sri Lanka dated 19 December 2012. Subsequently, the amendments to the SoRP along with the modification to the title as Statement of Alternative Treatment (SoAT) were approved by the Council on 21st August 2013. This right to use land is require to be amortised over the lease term or useful life of the right whichever is shorter and is disclosed under non-current asset. The SoAT for right-to-use land does not permit revaluation of right-to-use land. However, an adjustment to the 'right-to-use land' could be made to the extent that the change relate to the further period on the reassessment of liability to make the lease payment. b. Asiri Hospital Matara (Pvt) Ltd obtained lease hold right to land (extent of land is perches 38.34) and building situated at No 37, Anagarika Dharmapala Mawatha, Matara for 20 years commencing from 04 October 2006. c. The Asiri Hospital Kandy (Pvt) Ltd has entered into lease agreement with Urban Development Authority for a lease of the land (extent of land is 2 Acres 15.5 perches) situated at Peradeniya Road, Mulgampola for period of 50 years.

11. Goodwill

GROUP 2018 2017 Rs. Rs.

Goodwill 548,706,564 548,706,564 548,706,564 548,706,564

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interest over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the gain is recognised in Equity. 104 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

11. goodwill (Contd..) After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group's cash generating units that are expected to benefit from the combination transferred, the gain is recognised in Equity.

Goodwill acquired through business combinations have been allocated to Asiri Surgical Hospital PLC.

12. investment in Subsidiary Companies/ Associate Investment in Subsidiary Companies

2018 2017 Company 2018 2017 Carrying Market Carrying Market Direct Holding value Value Value Value % % Rs. Rs. Rs. Rs.

12.1 Quoted* Asiri Surgical Hospital PLC 78.39 73.68 2,665,510,325 3,582,403,815 2,390,655,282 3,582,403,815 2,665,510,325 3,582,403,815 2,390,655,282 3,582,403,815

2018 2017 2018 2017 carrying Market Value/ carrying Market Value/ Direct Holding Value directors Value directors valuation * valuation* % % Rs. Rs. Rs. Rs.

12.2 Un-quoted** Asiri Diagnostics Services (Pvt) Ltd 66.54 66.54 2,691,400 2,691,400 2,691,400 2,691,400 Asiri Hospital Matara (Pvt) Ltd 100 100 261,758,357 261,758,357 261,571,434 261,571,434 Central Hospital Ltd 99.73 99.73 7,115,692,216 8,886,238,516 7,113,304,669 8,886,238,516 Asiri Hospital Kandy (Pvt) Ltd 100 100 144,025,031 144,025,031 123,577,770 123,577,770 Asiri Central Hospital Ltd 94.26 94.16 1,704,167,477 2,166,079,647 1,702,004,174 2,166,079,647 Asiri Laboratories (Pvt) Ltd 100 100 1,000,000 1,000,000 1,000,000 1,000,000 9,229,334,481 11,461,792,951 9,204,149,447 11,441,158,767 Carrying Value of Investment in Subsidiaries 11,894,844,806 15,044,196,766 11,594,804,729 15,023,562,582

* Investment value of quoted shares have been determined based on market value of shares as at the reporting date. ** Directors' valuation of investment in un quoted shares have been determined based on the cost of the investments and recent transaction valuations in Central Hospital Ltd and Asiri Central Hospital Ltd.

Carrying values include the value recognised for the corporate guarantees provided by the Parent to the Subsidiaries. (Refer Note 4.2) 105 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

12.3 The Shares of Subsidiary Companies owned by Asiri Hospital Holdings PLC were pledged on behalf of the loans and overdraft facilities obtained by the Company. ( Note 18.4 for details of shares ).

12.4 Material Partly - Owned Subsidiaries Financial information of subsidiaries that have material non-controlling interests is provided below.

Proportion of Equity Interest held by Non-Controlling Interests:

2018 2017 % %

Company Name Asiri Surgical Hospital PLC 21.61% 26.32% Asiri Diagnostics Services (Pvt) Limited 33.46% 33.46%

Accumulated Balances of Material Non - Controlling Interest

2018 2017 Rs. Rs.

Company Name Asiri Surgical Hospital PLC 771,087,380 851,906,388 Asiri Diagnostics Services (Pvt) Limited 95,953,092 92,947,702

Total Comprehensive Income allocated to Material Non - Controlling Interest

2018 2017 Rs. Rs.

Company Name Asiri Surgical Hospital PLC 81,843,404 102,555,853 Asiri Diagnostics Services (Pvt) Limited 16,461,756 14,207,827 106 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

12. investment in Subsidiary Companies/ Associate (Contd..) Summarised Statement of Total Comprehensive Income for year ended 31 March 2018:

Asiri Surgical Hospital Asiri Diagnostics Services PLC (Pvt) Ltd 2018 2017 2018 2017 rs. Rs. Rs. Rs.

Revenue 3,275,348,652 2,884,315,584 159,566,769 126,818,581 Cost of Services (2,013,869,335) (1,885,575,532) (78,442,133) (63,624,407) Profit for the Year 546,602,916 262,789,259 49,314,757 42,145,413 Total Comprehensive Income for the Year 378,682,101 389,717,705 49,198,313 42,462,124 Attributable to Non-controlling Interests 97,097,703 102,555,853 16,461,756 14,207,827

Summarised Statement of Financial Position as at 31 March 2018:

Asiri Surgical Hospital Asiri Diagnostics Services PLC (Pvt) Ltd 2018 2017 2018 2017 rs. Rs. Rs. Rs.

Current Assets 803,836,513 610,393,735 54,291,892 40,795,827 Non- Current Assets 4,095,292,328 4,039,160,904 253,404,712 251,066,920 Current Liabilities 421,691,994 363,631,303 15,153,292 9,451,912 Non- Current Liabilities 638,904,590 638,904,590 4,623,324 4,623,324 Total Equity 3,567,752,237 3,647,018,746 286,744,086 277,787,513

Attributable to: Equity Holders of Parent 2,780,134,963 2,795,112,358 190,790,994 184,839,811 Non-controlling Interest 787,617,274 851,906,388 95,953,092 92,947,702 Dividend to Non-controlling Interests 97,081,826 55,626,330 13,466,082 8,931,585

12.5 investment in Associate/Joint Venture Asiri Hospital Holdings PLC has invested Rs. 30,000,000/- in Digital Health (Pvt) Ltd resulting in a 30% holding in Digital Health (Pvt) Ltd by Asiri Hospital Holdings PLC. 107 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

Digital Health was incorporated on 14 August 2015. The primary objective of the Company is to carry on the business using the Doc 990 system and/ or other systems or technology solutions developed by or for the Company from time to time which may inter alia include provision of e-laboratory, e-pharmacy, e-prescription and digital health record management services.

GROUP COMPANY 2018 2017 2018 2017 rs. Rs. Rs. Rs.

Balance as at the Beginning of the Year 8,167,299 30,000,000 30,000,000 30,000,000 Share of Profit/ (Loss) for the Period (8,167,299) (21,832,701) - - Balance as at the End of the Year - 8,167,299 30,000,000 30,000,000

Asiri-AOI Cancer Centre (Private) Limited started its operation on 01st September 2017 and as intended at the inception of the project, Asiri Surgical Hospital divested 50% stake of Asiri-AOI Cancer Centre (Private) Limited to the joint venture partner 'Cancer Treatment Services Hyderabad Private Limited' on 29th September 2017. Accordingly, 2,700,000 shares were disposed for a consideration of Rs. 212,500,000 and the gain on sale of shares amounts to Rs. 185,500,000 recorded under other income (Note 3.2).

GROUP 2018 2017 Rs. Rs.

Balance as at the Beginning of the Year - - Investment Made During the Year 27,000,000 - Share of Profit/ (Loss) for the Period 4,557,856 - Balance as at the End of the Year 31,557,856 -

13. other Financial Assets and Financial Liabilities 13.1 financial Assets - Available for Sale

GROUp coMPANY 2018 2017 2018 2017 2018 2017 2018 2017 Market Market Market Market Number of number of value value number of number of value value Shares Shares Rs. Rs. Shares Shares Rs. Rs.

Non - current National Development Bank PLC Market Value of Investment in Equity Securities 2,597,759 2,506,936 345,761,723 349,972,373 - - - - 2,597,759 2,506,936 345,761,723 349,972,373 - - - - 108 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

13. other Financial Assets and Financial Liabilities (Contd..) 13.1a gain/(Loss) on Available for Sale Financial Assets

GROUP COMPANY 2018 2017 2018 2017 Rs. Rs. Rs. Rs.

Gain/ (Loss) on Available for Sale Financial Asset (16,539,179) (71,715,773) - - (16,539,179) (71,715,773) - -

13.2 fair Value of Financial Assets and Liabilities not Carried at Fair Value Except for the below indicated loans and borrowing non-current balance, carrying value of financial assets and liabilities based on other methods of valuation approximates the fair value. This table does not include the fair values of non–financial assets and non–financial liabilities.

13.2.1 Group

Carrying Amount Fair Value (Level 2) 2018 2017 2018 2017 Rs. Rs. Rs. Rs.

Financial Liabilities Loans and Borrowings- Non Current 6,611,898,247 6,930,174,630 6,611,898,247 6,930,174,630

13.2.2 Company

Carrying Amount Fair Value (Level 2) 2018 2017 2018 2017 Rs. Rs. Rs. Rs.

Financial Liabilities Loans and Borrowings- Non Current 3,149,739,843 4,055,697,792 3,149,739,843 4,055,697,792

The following describes the methodologies and assumptions used to determine the fair values for those financial instruments which are not recorded using fair value measurement basis in the Financial Statements.

Assets for which Fair Value Approximates Carrying Value For financial assets and financial liabilities that have a short term maturity (original maturities less than a year), it is assumed that the carrying amounts approximate their fair values.

Financial assets and financial liabilities with variable interest rates are also considered to be carried at fair value. 109 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

13.3 fair Value Hierarchy 13.3.1 Group Assets measured at fair value

31 March level 1 level 2 level 3 2018 Rs. Rs. Rs. Rs.

Financial Assets - Available for Sale Equity shares (Non- Current) 345,761,723 345,761,723 - -

31 March level 1 level 2 level 3 2017 Rs. Rs. Rs. Rs.

Financial Assets - Available for Sale Equity shares (Non- Current) 349,972,373 349,972,373 - -

14. Inventories

GROUP COMPANY 2018 2017 2018 2017 Rs. Rs. Rs. Rs.

Chemical and Test Materials 110,593,776 110,322,147 76,295,425 63,978,208 Pharmaceuticals and Surgical 350,734,605 336,868,798 41,647,009 40,397,351 Consumables 62,012,367 68,119,842 7,199,831 24,380,226 523,340,748 515,310,787 125,142,265 128,755,785 110 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

15. Trade and Other Receivables

GROUP COMPANY 2018 2017 2018 2017 rs. Rs. Rs. Rs.

15.1 Trade and Other Receivables Trade Debtors 484,335,543 445,186,087 114,567,141 89,480,723 Related Parties (Note 15.3) 46,467,717 29,747,337 42,913,757 20,920,526 Less - Impairment of Trade Debtors (24,626,805) (19,578,876) (3,706,846) (83,668) 506,176,455 455,354,548 153,774,052 110,317,581 Other Debtors - Related Parties (Note 15.4) 2,896,624 2,716,658 600,507,734 382,575,289 Staff Loans 25,353,432 17,340,723 13,149,555 9,204,381 534,426,511 475,411,929 767,431,341 502,097,251

15.2 Advances, Deposits and Prepayments Advances, Deposits and Prepayments* 408,747,577 417,235,856 127,465,324 115,055,165 Employee Share Trust Fund (Note 15.5) 5,000,000 5,000,000 5,000,000 5,000,000 413,747,577 422,235,856 132,465,324 120,055,165 948,174,088 897,647,785 899,896,665 622,152,416

* The advance paid to Softlogic BPO Services (Private) Limited for software implementation amounting to Rs.34,314,224 (2017 - 21,884,134/-) is included in Advances and Prepayments ( Group).

15.3 Trade Debtors - Related Parties

GROUP COMPANY Relationship 2018 2017 2018 2017 Rs. Rs. Rs. Rs.

Softlogic Life Insurance PLC Group Company 24,967,222 15,941,347 3,383,065 4,357,585 Digital Health (Pvt) Limited Associate 21,500,495 13,805,990 5,317,165 3,736,933 Central Hospital Ltd Subsidiary - - 16,299,473 3,826,334 Asiri Surgical Hospital PLC Subsidiary - - 11,363,497 5,959,082 Asiri Diagnostic Services (Pvt) Ltd Subsidiary - - 1,701,447 2,108,658 Asiri Hospital Matara (Pvt) Ltd Subsidiary - - 4,849,110 931,934 46,467,717 29,747,337 42,913,757 20,920,526 111 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

15.4 other Debtors - Related Parties

GROUP COMPANY Relationship 2018 2017 2018 2017 Rs. Rs. Rs. Rs.

Asiri Hospital Matara (Pvt) Ltd Subsidiary - - - 4,467,604 Central Hospital Ltd Subsidiary - - 128,722 15,712,545 Asiri Hospital Kandy (Pvt) Ltd Subsidiary - - 579,714,191 325,504,922 Asiri Surgical Hospital PLC Subsidiary - - 20,198,561 35,319,746 Asiri Diagnostic Services (Pvt) Ltd Subsidiary - - 466,260 1,558,580 Softlogic Holdings PLC Parent Company 3,120 40,470 - - Softlogic Restaurants (Pvt) Ltd Group Company 2,206,004 1,901,171 - - Softlogic Finance PLC Group Company 218,000 184,142 - 11,892 Softlogic Retail (Pvt) Ltd Group Company 409,050 590,875 - - Odel PLC Group Company 60,450 - - - 2,896,624 2,716,658 600,507,734 382,575,289

Outstanding current account balances as at the year end are unsecured, non-interest bearing and settlement occurs in cash.

15.5 employee Share Trust Fund The Asiri Holdings PLC Employee Share Trust Fund was established in the year 2000/2001 with funds wholly provided by the company. The Share Trust Fund realised its investments during the financial year 2017/2018 in order to comply with the requirements of the Colombo Stock Exchange with regard to holding of shares in companies by trust companies. The proceeds from the sale of such shares which is the entitlement of the company is recorded as other income during the year (Note 3.2) pending the completion of administrative formalities to dissolve such fund.

2018 2017 Rs. Rs.

Opening Balance 5,000,000 5,000,000 Closing Balance 5,000,000 5,000,000

SSP Corporate Services (Pvt) Ltd has been appointed as the trustee of the trust with effect from 27 February, 2012. 112 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

15. Trade and Other Receivables (Contd..) 15.6 Age Analysis of Trade Receivables As at 31 March, the age analysis of trade receivables are as follows:

15.6.1 Group

Total neither past Past due but not Impaired Impaired due or nor 31 - 60 61 - 90 91 - 330 > 330 Impaired days days days days

2018 Gross Trade Receivable Balance 530,803,260 326,912,815 73,916,230 37,583,785 67,763,624 24,626,805 Less - Impairment (24,626,805) - - - - (24,626,805) 506,176,455 326,912,815 73,916,230 37,583,785 67,763,624 -

2017 Gross Trade Receivable Balance 474,933,424 257,136,643 82,977,020 40,217,849 72,328,302 22,273,609 Less - Impairment (19,578,876) - - - - (19,578,876) 455,354,548 257,136,643 82,977,020 40,217,849 72,328,302 2,694,733

15.6.2 Company

Total neither past Past due but not Impaired Impaired due or nor 31 - 60 61 - 90 91 - 330 > 330 Impaired days days days days

2018 Gross Trade Receivable Balance 157,480,898 119,586,564 15,178,243 6,486,911 12,522,334 3,706,846 Less - Impairment (3,706,846) - - - - (3,706,846) 153,774,052 119,586,564 15,178,243 6,486,911 12,522,334 -

2017 Gross Trade Receivable Balance 110,401,249 73,198,544 23,871,650 4,280,699 7,777,795 1,272,562 Less - Impairment (83,668) - - - - (83,668) 110,317,581 73,198,544 23,871,650 4,280,699 7,777,795 1,188,894 113 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

16. stated Capital COMPANY/GROUP 2018 2017 number rs. Number rs.

Balance at the Beginning of the Year 1,137,533,596 4,748,108,334 1,137,533,596 4,748,108,334 Balance at the End of the Year 1,137,533,596 4,748,108,334 1,137,533,596 4,748,108,334

17. revaluation Reserve

GROUP COMPANY 2018 2017 2018 2017 Rs. Rs. Rs. Rs.

Balance at beginning of the year 2,311,856,820 1,685,824,175 1,264,442,182 990,126,966

Revaluation During the year net of Deferred Tax Revaluation Surplus 984,357,072 652,725,730 458,919,029 280,333,245 Deferred Tax on Lands & Revaluation Surplus (919,573,806) (26,693,085) (473,180,763) (6,018,029) Balance at End of the Year 2,376,640,086 2,311,856,820 1,250,180,448 1,264,442,182

18. interest Bearing Loans and Borrowings

GROUP 2018 2018 2018 2017 2017 2017 Amount Amount Total Amount Amount Total Repayable Repayable Repayable Repayable Within 1 Year After 1 Year within 1 Year After 1 Year Rs. Rs. Rs. Rs. Rs. Rs.

Bank Loans (Note 18.1) 2,178,717,111 6,581,565,872 8,760,282,983 1,158,844,790 6,887,059,253 8,045,904,034 Bank Overdraft (Note 24.2 ) 1,682,704,318 - 1,682,704,318 1,224,505,296 - 1,224,505,295 Finance Lease (Note 18.1.1) 12,782,992 30,332,375 43,115,367 11,676,726 43,115,377 54,792,092 3,874,204,421 6,611,898,247 10,486,102,668 2,395,026,812 6,930,174,630 9,325,201,421 114 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

18. interest Bearing Loans and Borrowings (Contd..) 18.1 Bank Loans - Group

As at Loans interest repayments As at 01.04.2017 obtained charge 31.03.2018 Rs. Rs. Rs. Rs. Rs.

Commercial Bank of Ceylon PLC 4,531,184,522 816,650,541 565,330,596 (1,096,897,748) 4,816,267,911 Sampath Bank PLC 2,055,838,996 - 226,136,128 (522,173,200) 1,759,801,924 Bank of Ceylon 635,362,170 - 71,386,716 (193,146,720) 513,602,166 Nations Trust Bank PLC 86,852,699 - 10,401,784 (29,702,384) 67,552,100 Hatton National Bank PLC 736,665,647 - 82,152,303 (270,292,436) 548,525,513 Short Term Loan - Nations Trust Bank PLC - 750,000,000 12,015,000 (10,399,110) 751,615,890 Short Term Loan - Hatton National Bank PLC - 300,000,000 9,001,397 (6,083,918) 302,917,479 Short Term Loan - Cargills Bank - 250,000,000 8,758,369 (258,758,369) - 8,045,904,034 2,116,650,541 985,182,293 (2,387,453,885) 8,760,282,983

18.1.1 Finance Lease

As at repayments As at 01.04.2017 31.03.2018 Rs. Rs. Rs.

Commercial Bank PLC 56,275,776 (14,068,944) 42,206,832 Nations Trust Bank PLC 11,673,700 (3,066,691) 8,607,009 Gross Liability 67,949,476 (17,135,635) 50,813,841

Finance Charges Allocated to Future Periods Commercial Bank of Ceylon PLC (10,832,775) 4,464,860 (6,367,915) Nations Trust Bank PLC (2,324,609) 994,049 (1,330,560) Net Liability 54,792,092 (11,676,726) 43,115,367 115 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

18.2 long-Term Loan Details Details of the Approved Repayment Terms Security Security Long Term Facility Amount Loans Rs. Rs. 18.2.1 Asiri Surgical Hospital PLC Commercial 511.4 Mn 95 equal monthly installments of Rs. Concurrent Mortgage Bond No 3329/4687 with Hatton 125 Mn Bank of Ceylon 5,328,000/- each and a final installment of National Bank PLC over hospital property at No181, Kirula Road, PLC Rs. 5,266,000/- together with interest. Narahenpita, owned by Asiri Hospital Holdings PLC. (Hatton National Bank PLC interest Rs. 75 Mn and Commercial Bank of Ceylon PLC interest Rs. 125 Mn) Corporate Guarantee of Asiri Hospital Holdings PLC 148.4 Mn 18.2.2 Asiri Hospital Matara (Pvt) Ltd Commercial 73.46 Mn 71 equal monthly installments of Rs. Corporate Guarantee of Asiri Hospital Holdings PLC 73.46 Mn Bank of Ceylon 976,000/- and a final installment of Rs. PLC 924,000/- Nations Trust 96.50 Mn 59 equal monthly installments of Rs. Assignment over Amex Receivables, Loan agreement for 96.5 Mn 96.50 Mn Bank PLC 1,608,383/33 and a final installment of Rs. 1,608,383/53 18.2.3 Central Hospital Ltd Sampath Bank 326 Mn 95 equal monthly installment each worth Corporate Guarantee from Asiri Hospital Holdings PLC for Rs. 326 326 Mn PLC is Rs. 3,396,000/- and final installment is Mn. Rs.3,380,000/- Sampath Bank 1,150 Mn 119 Equal monthly installments of Securitisation of all future credit/debit card receivables of the 1,150 Mn PLC Rs. 9,600,000 and a final installment of company and assignment over credit/debit card receivables of Rs. 7,600,000 commencing from the month the company and future credit/debit card receivables. following the disbursment of the loan to be Loan agreement for Rs. 1150 Mn. served monthly Bank of Ceylon 960 Mn 94 Equal monthly installments Rs. Primary Concurrent Mortgage over freehold land and buildings at 960 Mn 10,146,667/- Final Installment Rs. No114, Norris Canal Rd, Colombo 10. 6,268,815/93 ( Ten years including two years grace period) 18.2.4 Asiri Hospital Kandy (Pvt) Ltd Commercial 630.6 Mn 89 equal monthly installments of Corporate Guarantee of Asiri Hospital Holdings PLC 630.6 Mn Bank of Ceylon Rs.7,006,000/- each and a final installment PLC of Rs.7,066,000 /-together with interest Commercial 2,120 Mn 95 equal monthly installments of Corporate Guarantee of Asiri Hospital Holdings PLC 2,120 Mn Bank of Ceylon Rs.22,080,000/- each and a final installment PLC of Rs.22,400,000 /-together with interest 116 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

18. interest Bearing Loans and Borrowings (Contd..) 18.3 Company

2018 2018 2018 2017 2017 2017 Amount Amount Total Amount Amount Total Repayable Repayable Repayable Repayable Within 1 Year After 1 Year within 1 Year After 1 Year Rs. Rs. Rs. Rs. Rs. Rs.

Bank Loans (Note 18.3.1) 1,817,770,508 2,428,892,000 4,246,662,508 765,168,182 3,184,806,000 3,949,974,182 Bank Overdraft (Note 24.2 ) 1,637,890,139 - 1,637,890,139 731,713,488 - 731,713,488 Loans due to Related Party (Note 18.3.2) 2,117,249,489 699,919,808 2,817,169,297 2,021,329,314 841,148,604 2,862,477,918 5,572,910,136 3,128,811,808 8,701,721,944 3,518,210,984 4,025,954,604 7,544,165,588 Finance Leases (Note 18.3.3) 8,815,141 20,928,035 29,743,176 7,900,628 29,743,188 37,643,816 5,581,725,277 3,149,739,843 8,731,465,120 3,526,111,612 4,055,697,792 7,581,809,404

18.3.1 Bank Loans

As at Loans interest As at 01.04.2017 obtained charge Repayments 31.03.2018 Rs. Rs. Rs. Rs. Rs.

Commercial Bank of Ceylon PLC 2,407,965,538 - 265,017,811 (694,637,650) 1,978,345,699 Sampath Bank PLC 805,342,997 - 87,100,704 (227,185,776) 665,257,925 Hatton National Bank PLC 736,665,647 - 82,152,303 (270,292,436) 548,525,514 Short term Loan - Nations Trust Bank PLC - 750,000,000 12,015,000 (10,399,110) 751,615,890 Short term Loan - Cargills Bank - 250,000,000 8,758,368 (258,758,369) - Short term Loan - Hatton National Bank PLC - 300,000,000 9,001,397 (6,083,918) 302,917,479 3,949,974,182 1,300,000,000 464,045,583 (1,467,357,259) 4,246,662,507

18.3.2 Loans due to Related Parties

As at Temporary interest As at 01.04.2017 finance charge Repayments 31.03.2018 Obtained Rs. Rs. Rs. Rs. Rs.

Asiri Surgical Hospital PLC 607,071,625 - 54,127,315 (188,627,926) 472,571,014 Asiri Diagnostics Services (Pvt) Ltd 234,076,979 - 26,090,978 (25,982,961) 234,184,996 Asiri Central Hospital Ltd 2,021,329,314 85,000,000 233,748,116 (229,664,143) 2,110,413,287 2,862,477,918 85,000,000 313,966,409 (444,275,030) 2,817,169,297 117 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

18.3.3 Finance Lease

As at obtained repayments As at 01.04.2017 during the 31.03.2018 Year Rs. Rs. Rs. Rs.

Commercial Bank of Ceylon PLC 40,897,795 - (10,224,449) 30,673,346 Nations Trust Bank PLC 5,836,820 - (1,429,428) 4,407,392 Gross Liability 46,734,615 - (11,653,877) 35,080,738

Finance Charges Allocated to Future Periods Commercial Bank of Ceylon PLC (7,850,542) - 3,251,587 (4,598,955) Nations Trust Bank PLC (1,240,257) - 501,650 (738,607) Net Liability 37,643,816 - (7,900,640) 29,743,176

18.4 long Term Loan Details Details of the Approved Repayment Terms Security Security Long Term Facility Amount Loans Rs. Rs. Sampath Bank 363 Mn 60 equal monthly installments of Rs. 6,050,000/- Corporate Guarantee by Asiri Surgical Hospital PLC 363 Mn PLC commencing the month after disbursement Commercial 377.6 Mn 71 equal monthly installments of Rs.5,107,000/- Primary Concurrent Mortgage Bond No 2365/1447 and 100 Mn Bank of Ceylon each and final installment of Rs.5,085,000/- 1559/357 totalling of Rs. 160 Mn over hospital property at PLC together with interest No 181, Kirula Road, Narahenpita owned by Asiri Hospital Holdings PLC covering Bank's interest to the extent of Rs. 100 Mn. (Bank of Ceylon Interest - Rs. 60 Mn) Secondary Mortgage Bond No 963 for Rs. 275 Mn over the 275 Mn above hospital property. Commercial 536 Mn 95 equal monthly installments of Rs.5,584,000/- Corporate Guarantee of Asiri Surgical Hospital for Rs.550 Mn 550 Mn Bank of Ceylon each and final installment of Rs.5,520,000/- PLC together with interest Commercial 2401.9 Mn 95 equal monthly installments of Rs.25,025,000/- Primary Mortgage Bond No 3919 over 74,454,026 shares of 2,225 Mn Bank of Ceylon and a final installment of Rs. 24,591,000/- Central Hospital Limited for Rs. 2,225 Mn PLC together with interest Sampath Bank 670 Mn 119 equal monthly installments of Rs. 5,600,000 Securitisation of all future credit/debit card receivable of the 670 Mn PLC and a final installment of Rs. 3,600,000 company. commencing from the month following the Loan agreement for Rs. 670 Mn. disbursment of the loan to be served monthly Assignment over credit /debit card receivable of the company with interest. and future debit /credit card receivable. Hatton National 750 Mn 48 equal monthly installments of Rs.15,625,000/- Clean Facility Bank PLC together with interest 118 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

19. Amounts due on Leasehold Property

GROUP COMPANY 2018 2017 2018 2017 Rs. Rs. Rs. Rs.

Payable to Board of Investment of Sri Lanka 26,128,667 30,200,667 - - 26,128,667 30,200,667 - -

19.1 Group

2018 2018 2018 2018 2017 Amount Amount Amount Total Total Repayable Repayable Repayable Within 1 Year within 2-5 Years After 5 Year Rs. Rs. Rs. Rs. Rs.

Payable to the Board of Investment of Sri Lanka On Leasehold Land 4,072,000 16,288,000 5,768,667 26,128,667 30,200,667 4,072,000 16,288,000 5,768,667 26,128,667 30,200,667

19.2 Terms of Repayment - Board of Investment of Sri Lanka (BOI) 19.2.1 An annual sum equivalent to 4% of the total market value of leasehold land (Rs.101,800,000/-) as at the date of the lease agreement, over a period of 25 years commencing from the financial year 2000/2001.

19.2.2 BOI reserves the right to revise the annual lease rent every 05 years on the basis of an annual increase not greater than the Average Weighted Deposit Rate prevailing at the end of each year as determined by the Central Bank of Sri Lanka or 10%, per annum which ever is lower. Accordingly, BOI has increased the annual lease rent by 5% in the financial year 2009/10. Accordingly, the finance cost amounting to Rs. 203,600/- has been recognised as an expense each year from year 2010/11.

If BOI exercises same right, at the end of 5 years and every 5 years thereafter at the maximum allowed rate of 10%, the Company would have to incur a gross liability of Rs.32,964,876/- including future finance costs of Rs. 4,460,876/-.

All payments are subject to taxes prevailing at the time of payment. 119 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

20. deferred Tax Assets and Liabilities 20.1 Group

2018 2017 Rs. Rs.

Net Deferred Tax Liability At the Beginning of the Year 164,344,016 223,066,308 Charge recognised in Statement of Profit or Loss ( Note 6) 178,547,932 (87,492,794) Charge recognised in Statement of Other Comprehensive Income ( Note 6) 969,400,381 28,770,502 At the End of the Year 1,312,292,329 164,344,016

The closing deferred tax asset and liability balances relates to the following.

Liabilities Assets 2018 2017 2018 2017 Rs. Rs. Rs. Rs.

Revaluation of Investment Property and Property Plant and Equipment 1,192,011,610 183,558,541 - 43,432,618 Accelerated Depreciation for Tax Purpose 408,193,264 122,760,663 - 40,882,042 Employee Benefit Liabilities (113,165,410) (34,412,815) - (17,129,898) Losses Available for off set against Future Taxable Income (174,747,135) - - (174,747,135) 1,312,292,329 271,906,389 - (107,562,373)

20.2 Company

2018 2017 Rs. Rs.

Net Deferred Tax Liability At the beginning of the Year 71,122,763 58,753,870 Reversal Recognised in Statement of Profit or Loss ( Note 6) 92,070,333 7,731,100 Reversal Recognised in Statement of Other Comprehensive Income ( Note 6) 468,465,233 4,637,793 At the End of the Year 631,658,329 71,122,763 120 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

20. deferred Tax Assets and Liabilities (Contd..) The closing deferred tax asset and liability balances relates to the following:

2018 2017 Rs. Rs.

Revaluation of Property Plant and Equipment 488,661,666 15,480,903 Accelerated Depreciation for Tax Purpose 194,373,587 74,551,686 Employee Benefit Liabilities (51,376,924) (18,909,826) 631,658,329 71,122,763

Group is liable to pay income tax at 28% on its profits commencing from 1 April 2018 in accordance with New Inland Revenue Act No 24 of 2017 which was made effective from 1 April 2018. Hence Deferred tax liabilities have been measured considering the tax rate of 28% other than for Central Hospital Ltd which is on BOI tax concession for 15%.

21. post Employment Benefit Liability 21.1 retirement BenefitO bligations- Gratuity

GROUP COMPANY 2018 2017 2018 2017 Rs. Rs. Rs. Rs.

Defined Benefit Obligation at the beginning of the year 400,972,781 351,282,058 157,581,884 145,531,157 Interest on Retirement Benefit Liability 50,398,757 38,641,026 19,918,350 16,008,427 Current Service Cost 47,291,309 42,203,482 16,477,192 14,345,247 Actuarial Loss/(Gain) for the Year 8,708,294 21,512,233 16,841,181 11,501,970 Benefit paid during the Year (41,698,789) (52,666,018) (27,329,591) (29,804,917) Defined Benefit Obligation at the end of the year 465,672,352 400,972,781 183,489,016 157,581,884

Charge for the period Interest Charge for the Year 50,398,757 38,641,026 19,918,350 16,008,427 Current Service Cost 47,291,309 42,203,482 16,477,192 14,345,247 Actuarial Loss/ (Gain) for the Year 8,708,294 21,512,233 16,841,181 11,501,970 106,398,360 102,356,741 53,236,723 41,855,644 121 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

21.2 Messrs. Actuarial and Management Consultants (Pvt) Ltd, Actuaries, carried out an actuarial valuation for Asiri Hospital Holdings PLC, Asiri Surgical Hospital PLC, Central Hospital Ltd , Asiri Diagnostics Services (Pvt) Ltd and Asiri Hospital Matara (Pvt) Ltd of the defined benefit plan gratuity as at 31 March 2018. Appropriate and compatible assumptions were used in determining the cost of retirement benefits. The principal assumptions used are as follows:

Principal Actuarial Assumption The principal financial assumptions underlying the valuation are as follows:

2018 2017

Discount Rate 10% p.a 12.50% - 12.70% p.a Salary Increase Rate 7.5% p.a 9% p.a Staff Turnover Rate Up to 50 years - 55 years 12% - 28% Up to 50 years - 55 years 10% - 28%

The demographic assumptions underlying the valuation are retirement age of 55 years.

The Company will continue as a Going Concern.

21.3 In order to illustrate the significance of the salary escalation rates and discount rates assumed in this valuation a sensitivity analysis of all employees in Asiri Hospital Holdings PLC is as follows;

COMPANY 2018 2017

Discount Rate as at 31 March Effect on Retirement Benefit Obligation due to 1% increase in Discount Rate (4,843,442) (4,437,545) Effect on Retirement Benefit Obligation due to 1% decrease in Discount Rate 5,163,343 4,759,511

Salary Escalation Rate as at 31 March Effect on Retirement Benefit Obligation due to 1% increase in Salary Escalation rate 6,078,544 5,593,888 Effect on Retirement Benefit Obligation due to 1% decrease in Salary Escalation rate (5,796,346) (5,298,363) 122 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

21. post Employment Benefit Liability (Contd..) 21.4 In order to illustrate the significance of the salary escalation rates and discount rates assumed in this valuation a sensitivity analysis of all employees in Asiri Hospital Holdings PLC and It's Subsidiaries including Asiri Surgical Hospital PLC, Asiri Hospital Matara (Pvt) Ltd, Central Hospital Ltd and Asiri Diagnostics Services (Pvt) Ltd is as follows;

GROUP 2018 2017

Discount Rate as at 31 March Effect on Retirement Benefit Obligation due to 1% Increase In Discount Rate (12,482,668) (11,540,307) Effect on Retirement Benefit Obligation due to 1% Decrease In Discount Rate 13,248,968 12,338,756

Salary Escalation Rate as at 31 March Effect on Retirement Benefit Obligation due to 1% Increase in Salary Escalation Rate 15,564,511 14,428,819 Effect on Retirement Benefit Obligation due to 1% Decrease in Salary Escalation Rate (14,859,135) (13,705,054)

21.5 The following payments are expected contributions to the defined benefit plan in future years:

GROUP COMPANY 2018 2017 2018 2017 rs. Rs. Rs. Rs.

Within the next 12 Months 152,227,650 119,713,301 65,174,954 56,327,375 Between 1 to 2 Years 137,274,188 113,165,317 48,843,193 37,797,895 Between 3 to 5 Years 114,000,874 101,374,397 42,871,698 35,962,493 Between 6 to 10 Years 52,240,809 52,511,587 22,233,104 21,145,149 Beyond 10 Years 9,928,831 14,208,179 4,366,066 6,348,972 Total Expected Payments 465,672,352 400,972,781 183,489,015 157,581,884

22. Trade and Other Payables

GROUP COMPANY 2018 2017 2018 2017 Rs. Rs. Rs. Rs.

22.1 Trade and Other Creditors Trade Payables 547,318,084 426,412,565 87,036,134 118,426,078 Trade Payable - Related Parties (Note 22.3) 22,064,457 13,473,852 4,075,494 2,394,128 569,382,541 439,886,417 91,111,628 120,820,206 123 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

GROUP COMPANY 2018 2017 2018 2017 Rs. Rs. Rs. Rs.

22.2 other Payables Sundry Creditors Including Accrued Expenses 313,770,899 300,051,679 60,718,367 53,811,181 Other Payable Related Parties (Note 22.4) - - 28,027,614 23,936,028 313,770,899 300,051,679 88,745,981 77,747,209 883,153,440 739,938,096 179,857,610 198,567,415

22.3 Trade Payable - Related Parties

GROUP COMPANY Relationship 2018 2017 2018 2017 Rs. Rs. Rs. Rs.

Asiri-AOI Cancer Centre (Pvt)Ltd Joint Venture 2,281,861 - - - Digital Health (Pvt)Ltd Associate 539,873 - - - Softlogic Holdings PLC Parent Company - 302,588 - 65,780 Softlogic BPO Services (Pvt) Ltd Group Company 6,429,553 84,520 1,816,244 - Softlogic Communications (Pvt) Ltd Group Company 150,610 47,940 100,973 7,990 Softlogic Corporate Services (Pvt) Ltd Group Company 1,746,668 1,941,315 17,602 246,086 Softlogic Finance PLC Group Company 594,446 866,886 - - Softlogic Mobile Distribution (Pvt) Ltd Group Company 262,944 66,220 - 12,320 Softlogic Computers (Pvt) Ltd Group Company 2,630,590 1,048,444 1,228,978 58,765 Softlogic Information Technologies (Pvt) Ltd Group Company 5,142,287 2,580,511 909,246 714,183 Softlogic Retail (Pvt) Ltd Group Company 2,130,313 6,186,337 - 1,289,004 Future Automobiles (Pvt) Ltd Group Company 2,451 239,803 2,451 - Softlogic Automobiles (Pvt) Ltd Group Company 143,456 109,288 - - Nextage (Pvt) Limited Group Company 9,405 - - - 22,064,457 13,473,852 4,075,494 2,394,128 124 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

22. Trade and Other Payables (Contd..) 22.4 other Payable - Related Parties

GROUP COMPANY Relationship 2018 2017 2018 2017 Rs. Rs. Rs. Rs.

Asiri Surgical Hospital PLC Subsidiary - - 9,933,292 9,604,636 Asiri Diagnostics Services (Pvt) Ltd Subsidiary - - 11,338,836 9,272,459 Central Hospital Ltd Subsidiary - - 5,188,823 2,846,748 Asiri Hospital Matara (Pvt) Ltd Subsidiary - - 558,163 1,212,187 Asiri Laboratories (Pvt) Ltd Subsidiary - - 1,000,000 1,000,000 Asiri Central Hospital Ltd Subsidiary - - 8,500 - - - 28,027,614 23,936,030

Outstanding current account balances as at the year end are unsecured, non-interest bearing and settlement occurs in cash.

23. income Tax Payable

GROUP COMPANY 2018 2017 2018 2017 Rs. Rs. Rs. Rs.

Balance at Beginning of the Year 95,370,344 92,497,412 11,087,504 33,665,153 Provision for Income Tax During the Year ( Note 6 ) 521,019,499 264,698,779 208,343,640 50,049,146 Payments made during the Year (306,900,924) (261,825,847) (37,551,399) (72,626,796) Balance at the End of the Year 309,488,920 95,370,344 181,879,745 11,087,504 125 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

24. cash and Cash Equivalents in the Cash Flow Statement Components of Cash and Cash Equivalents

GROUP COMPANY 2018 2017 2018 2017 Rs. Rs. Rs. Rs.

24.1 favourable Cash and Cash Equivalents Balance Cash at Banks and On Hand 435,268,342 807,828,376 49,506,598 535,703,167 Short Term Deposits - Reverse Repurchase Agreements 862,071,369 265,000,000 564,208,562 - 1,297,339,711 1,072,828,376 613,715,160 535,703,167

24.2 Unfavourable Cash and Cash Equivalents Balance Bank Overdraft (Note 18) (1,682,704,318) (1,224,505,295) (1,637,890,139) (731,713,488) Total Cash and Cash Equivalents for the Purpose of the Cash Flow Statement (385,364,607) (151,676,919) (1,024,174,979) (196,010,321)

25. commitments and Contingencies 25.1 capital Expenditure and Other Commitments 25.1.1 Capital Expenditure Commitments There were no material commitments outstanding as at 31 March 2018 for future capital expenditure except for the below,

2018 2017 Rs. Rs.

Capital Expenditure Commitments 1,783,994,737 1,832,798,814 1,783,994,737 1,832,798,814

25.2 contingent Liabilities (a) Legal Claims Pending litigations against Asiri Hospital Holdings PLC and Asiri Surgical Hospital PLC, Central Hospital Ltd with a maximum liability of Rs. 41 Mn, Rs. 100 Mn and 100 Mn respectively exist as at the reporting date. (2017 - Asiri Hospital Holdings PLC - Rs. 41 Mn, Asiri Surgical Hospital PLC - Rs. 100 Mn, Central Hospital Ltd - Rs. 100 Mn )

In addition, 1) H.C. (Civil) 417/2015/MR- Krishnan Thangaraj Vs. Asiri Central Hospitals Ltd, Oraz International Property Developers and Construction (Pvt) Ltd and H.G. Shalika Perera relating to a permanent injunction restraining the payment of any commission on the sale of the land and premises bearing Assessment No.37, Horton Place, Colombo 07 to P.P.M. Edwards. An Enjoining Order was issued restraining above at the First instance. 126 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

25. commitments and Contingencies (Contd..) 2) D.C. L/12652 - Mrs. Shriyalatha Ranatunga vs Asiri Hospital Matara (Pvt) Ltd, dispute between the parties regarding the west boundary of the land. Answer was filed by the counsel for the Defendant 3) LT/M/26/53/2016 - Mrs. Lalitha Gamaethige vs. Asiri Hospital Matara (Pvt) Ltd, The Applicant had filed an application in the Labour Tribunal of Matara alleging the wrongful termination of her services by the company. When this matter was taken up on aforesaid date, the evidence of the Labour Officer was completed.

Based on the information currently available the management is in the view that the ultimate resolution of such legal procedures would not likely to have a material adverse effect on the result of the operations, financial position or liquidity of the company. Accordingly, no provision for any liability has been made in these financial statements.

(b) Guarantees The respective Group Companies have signed Corporate Guarantee Bonds with the following banks securing the following banking facilities obtained by the Group.

GROUP COMPANY 2018 2017 2018 2017 Rs. Rs. Rs. Rs.

Sampath Bank PLC 899,000,000 899,000,000 436,000,000 436,000,000 Nations Trust Bank PLC - 200,000,000 - - Hatton National Bank PLC 580,000,000 580,000,000 250,000,000 250,000,000 Commercial Bank of Ceylon PLC 3,449,000,000 5,858,460,000 2,899,000,000 3,552,460,000 Bank of Ceylon 200,000,000 200,000,000 200,000,000 200,000,000 Cargills Bank Limited - 250,000,000 - - 5,128,000,000 7,987,460,000 3,785,000,000 4,438,460,000

25.3 contingent Income Taxes A dispute has arisen with the Department of Inland Revenue with regard to the applicability of the income tax exemption in terms of the agreement entered between Asiri Surgical Hospital PLC and the Board of Investment of Sri Lanka (BOI) in 2000. Since there is litigation in the Court of Appeal in CA (Writ) 386/ 2016 with regard to this matter, in accordance with Paragraph 92 of LKAS 37, we are unable to provide further information on this and associated risks, in order not to impair the outcome and/or prejudice the Company’s position in this matter. The aforesaid matter is coming up for argument on 18th of July 2018 at the Court of Appeal. 127 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

26. Assets Pledged The following assets have been pledged as security for liabilities.

GROUP COMPANY Carrying Amount Pledged carrying Amount Pledged 2018 2017 2018 2017 Nature of Assets Nature of liability Rs. Rs. Rs. Rs.

Investment Primary Mortgage Bond for loans and borrowings 7,115,692,216 7,113,304,669 7,115,692,216 7,113,304,669 Total Movable and Primary/Secondary Mortgage Bond Immovable Properties for loans and borrowings 7,800,400,000 6,410,075,000 2,390,000,000 1,362,075,000 Inventories and Trade Debtors Hypothendication Bond for Bank Overdraft 538,556,888 473,939,569 - - 15,454,649,104 13,997,319,238 9,505,692,216 8,475,379,669

27. events Occurring after the Reporting Date There have been no material events occurring after the reporting date that require adjustments to or disclosure in the Financial Statements. 128 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

28. related Party Disclosures Details of significant related party disclosures are as follows.

28.1 Transactions with Related Entities

GROUP COMPANY 2018 2017 2018 2017 Rs. Rs. Rs. Rs.

Subsidiaries Opening Balance 01 April - - (2,491,024,541) (2,332,051,131) Repayment of Temporary Finance Obtained, Fund Transfers and Interest Charged - - (396,984,985) (440,109,961) Interest Charged - - 286,716,919 247,466,750 Sale/(Purchase) of Goods/Services - - 51,360,111 4,626,621 Channelling Fee Collected by Related Party/ (Company on Behalf of the Related Party) - - 4,847,268 4,250,062 Expenses incurred by the Company on Behalf of Related Party - - 337,348,294 24,793,117 Closing Balance 31 March - - (2,207,736,934) (2,491,024,541)

Associate/Joint Venture Opening Balance 01 April - - - - Sale/(Purchase) of Goods/Services 18,678,758 - 5,317,165 - Closing Balance 31 March 18,678,758 - 5,317,165 -

Parent Entity Opening Balance 01 April (262,118) 116,777,842 - - Repayment of Temporary Finance Obtained, Fund Transfers 40,337,264 (228,443,914) - 67,446,048 Interest charges on Funds transfers - 9,350,143 - - Sale/(Purchase) of Goods/Services (29,637,778) 96,711,019 1,457,190 (67,511,829) Expenses incurred by the Company on Behalf of Related Party (1,816,244) 5,342,792 (1,816,244) - Closing Balance 31 March 8,621,124 (262,118) (359,054) (65,781)

Balance as at 31 March 27,299,882 (262,118) (2,208,095,988) (2,491,090,322) Included Under Trade Receivables ( Note 15.3) 46,467,717 40,470 40,668,684 12,826,008 Included Under Other Receivables ( Note 15.4) 2,896,624 - 600,507,733 382,563,398 Included Under Interest Bearing Loans and Borrowings (Note 18.3) - - (2,817,169,295) (2,862,477,917) Included Under Trade Payables ( Note 22.3 ) (22,064,459) (302,588) (4,075,495) (65,780) Included Under Other Payables ( Note 22.4 ) - - (28,027,615) (23,936,030) 27,299,882 (262,118) (2,208,095,988) (2,491,090,322) 129 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

28.2 Management fees paid to Softlogic Holdings PLC amounted to Rs.15,024,492/- in the current financial year. (2017 - Rs.13,774,287/-).

28.3 Management fees received from Asiri Diagnostic Services (Pvt) Ltd amounted to Rs. 7,200,000/- in the current financial year. (2017 - Rs.7,200,000/-).

28.4 The Company carried out transactions in the ordinary course of its business on an arm’s length basis with parties who are defined as related parties in Sri Lanka Accounting Standard LKAS 24 – Related party disclosure.

28.5 compensation of Key Management personnel*

GROUP COMPANY 2018 2017 2018 2017 Rs. Rs. Rs. Rs. a) Short Term Employee Benefits 43,475,500 42,840,000 37,055,500 21,579,356 43,475,500 42,840,000 37,055,500 21,579,356

* Key management personnel include Board of Directors of Asiri Hospital Holdings PLC and its Subsidiary Companies b) The Directors of the Company hold 381,088 shares of Asiri Hospital Holdings PLC as at 31 March 2018. ( 2017- 380,738) c) As at 31 March 2018, Softlogic Holdings PLC, Softlogic Finance PLC and Softlogic Life Insurance PLC hold 586,858,799 shares (2017 - 579,117,217) of the Company. 130 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

28. related Party Disclosures (Contd..) d) Name of the Related Party Details of Transactions GROUP COMPANY Goods and Goods and Goods and Goods and Services Services Services Services (Obtained)/ (Obtained)/ (Obtained)/ (Obtained)/ Rendered Rendered Rendered Rendered 2018 2017 2018 2017 Rs. Rs. Rs. Rs.

Softlogic Computers (Pvt) Ltd Purchase of Computers and (11,647,147) (11,645,847) (6,928,852) (7,110,609) Accessories Softlogic Holdings PLC Technical fees, hiring charges and (21,416,742) (72,854,620) (26,809,530) (67,511,828) repairs Softlogic Information Technologies Software Maintenance Charges (49,049,652) (43,043,837) (22,564,147) (31,779,039) (Pvt) Ltd Softlogic Automobiles (Pvt) Ltd Motor Vehicle Repair,Purchase of (43,526,325) (24,945,109) (11,055,413) (726,695) Ambulance Softlogic Communications (Pvt) Ltd Purchase of Mobile Phones (1,581,469) (544,742) (798,340) (148,740) Softlogic Corporate Services (Pvt) Secretarial Services (4,673,132) (8,403,906) (2,359,845) (3,030,798) Ltd Softlogic Retail (Pvt) Ltd Repair and Purchase of Furniture and 120,443,027 (65,775,479) (18,823,388) (36,904,908) Stationary, Electronic Equipments Asian Alliance Insurance PLC Sales of blood, drugs, insurance - (32,402,892) - (8,285,957) payments and others - up to 30 September 2016 Future Automobiles (Pvt) Ltd Purchase of Motor Vehicles (10,571,582) (67,584,587) (7,484,440) (22,579,070) Softlogic BPO Services (Pvt) Ltd System Maintenance Charges (79,046,764) (64,819,529) (24,028,227) (16,805,665) Softlogic Brands (Pvt) Ltd Purchase of Furniture (125,673) - (125,673) - Softlogic Finance PLC Purchase of Motor Vehicles (7,771,170) (12,417,671) - - Softlogic Mobile Distribution (Pvt) Purchase of Mobile Phones and (101,780) (1,596,272) (101,780) (884,453) Ltd Repairs Softlogic Life Insurance PLC Patient Medical Insurance cover 93,475,433 68,337,017 29,033,212 47,213,572 Softlogic Restaurants (Pvt) Ltd Rent Income 8,021,216 6,804,699 - - Softlogic Destination Management Air ticketing Services (99,800) (256,100) - - (Pvt) Ltd

Digital Health (Pvt) Ltd Maintenance and Data Connection (3,116,393) (1,091,560) (1,173,000) - Charges

Nextage (Pvt) Ltd Commision paid on advertising (243,039) (286,261) - - 131 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

d) Name of the Related Party Details of Transactions GROUP COMPANY Goods and Goods and Goods and Goods and Services Services Services Services (Obtained)/ (Obtained)/ (Obtained)/ (Obtained)/ Rendered Rendered Rendered Rendered 2018 2017 2018 2017 Rs. Rs. Rs. Rs. Softlogic International (Pvt) Ltd Asset Purchases (228,154) - (228,154) - Softlogic City Hotels (Pvt) Ltd Hotel Charges (331,105) - (331,105) - Softlogic Communication Services Repair Charges (171,945) - (171,945) - (Pvt) Ltd (11,762,196) (332,526,697) (93,950,626) (148,554,190)

28.6 off Balance Sheet Items Company a) Guarantees made by Asiri Hospital Holdings PLC, has been given in Note 25.2.(b) to these Financial Statements.

Asiri Hospital Holdings PLC has granted Corporate Guarantees to Sampath Bank PLC, Hatton National Bank PLC, Commercial Bank of Ceylon PLC and Bank of Ceylon for the individual loans and permanent overdraft facilities to secure the banking facilities obtained by the Subsidiaries for the value of Rs. 436 Mn, Rs. 250 Mn, Rs 2,899 Mn and Rs. 200 Mn respectively. b) Refer Note 26 to these Financial Statements for assets pledged by Asiri Hospital Holdings PLC in order to obtain loans.

Group a) Guarantees made by Group of Asiri Hospital Holdings PLC, has been given in Note 25.2.(b) to these Financial Statements.

Asiri Hospital Holdings PLC and It's Subsidiaries has granted Corporate Guarantees to Sampath Bank PLC, Hatton National Bank PLC, Commercial Bank of Ceylon PLC, Bank of Ceylon for the individual loans and permanent overdraft facilities to secure the banking facilities obtained by the Subsidiaries for the value of Rs. 899 Mn, Rs. 580 Mn, Rs. 3,449 Mn and Rs. 200 Mn respectively. b) Refer Note 26 to these Financial Statements for assets pledged by Asiri Hospital Holdings PLC Group in order to obtain the loans.

28.7 other Transactions Company The shareholders of the Company are eligible for discounts up to 50% on the hospital bills excluding the charges for drugs, medical consumables, professional fees and blood charges up to a limit of 12.5% per annum, of the nominal value of the shares held for a minimum period of three months. Discounts are also given on investigation on out patients channeling such as on Laboratory, MRI, X-Ray, ECG, Ultrasound Scanning and others provided by the Company.

This facility is extended to the shareholder and three nominees, subject to the above limit. 132 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

29. financial Risk Management Objectives and Policies Risk is associated with any business. The type of risk and the degree to which it affects a particular business varies. Uncertainties provide both risk and opportunity with a potential to erode or enhance the enterprise value. The Board of Directors is mindful of these uncertainties and through the Management at various levels have put in place adequate systems to identify the probable occurrence of such risks in advance and to exercise mitigating measures to minimise the impact.

The key Financial Risks include Credit Risk, Interest Rate Risk, Legal Risk, Foreign Exchange Risk, Investment Risk and Liquidity Risk. Managing these risks is part of the Company's risk management process.

Mechanisms adopted by the Company in managing eventual impact of such risk are given below.

Credit Risk The Company admit patients on placement of a deposit or in an emergency, even without a deposit. Further, the hospital admit patients who are corporate clients. There is a risk of a patient not having adequate funds to settle his / her bill at the time of discharge. In order to mitigate such risk, the Company issues interim bills to the patients requesting periodic bill settlement. Further there is a risk of corporate clients' payments being delayed or not being paid. The Company evaluates credit worthiness of companies before granting credit facilities to corporate clients in order to minimise the non- collection of bills.

Interest Rate Risk Interest rate risk is the Company’s exposure to adverse movement in interest rates. The Company has obtained multiple facilities from various banks for working capital, capital expenditure and investment at varying terms and conditions. The finance function negotiate with banks and finance institutions to get the best interest rates and favourable terms for both long and short term borrowing facilities.

Legal Risk Legal risks are those risks resulting from legal consequences of transactions, with inadequate documentation, legal or regulatory issues and other factors that may result in contracts with counter parties becoming unenforceable causing unexpected financial losses. In addition to complying with the Colombo Stock Exchange, Securities and Exchange Commission and Companies Act disclosure requirements, the Company also complies with Sri Lanka Accounting Standards.

Foreign Exchange Risk Foreign Exchange Risk is the Company’s exposure to adverse movement in foreign currency against the Sri Lankan Rupee.

Investment Risk A common uncertainty associated with investments is that they may not provide the desired returns. The Company invests substantial sums in capital expenditure for expansion and new services in addition to investments in other companies. Returns on such investments are closely monitored and benefits are periodically evaluated.

Liquidity Risk Cash flow forecasting is performed by the finance division. The Finance division monitor rolling forecasts of the Company's liquidity requirements to ensure it has sufficient cash to meet operational needs. Such forecasting takes into consideration the Company's covenant compliance and compliance with internal balance sheet ratio targets. 133 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notes to the Financial Statements

The maturity profile of the company's financial liabilities are as follows :

0-12 Months 1-5 years >5 years Total

2018 Interest Bearing Loans and Borrowings 2,013,979,746 7,538,865,339 1,421,836,030 10,974,681,116 Trade and other Payables 883,153,440 - - 883,153,440 Amount due on Leasehold Property 4,072,000 16,288,000 5,768,667 26,128,667

0-12 Months 1-5 years >5 years Total

2017 Interest Bearing Loans and Borrowings 2,100,579,948 8,075,753,431 1,601,891,776 11,778,225,155 Trade and Other Payables 883,153,440 - - 883,153,440 Amount due on Leasehold Property 4,072,000 16,288,000 9,840,667 30,200,667

Undrawn loan facilities of the company's financial liabilities are as follows :

Undrawn Facilities of the Group

Financial Institution Undrawn Facility Amount as at 31.03.2018

Commercial Bank of Ceylon PLC 526,107,389 Sampath Bank PLC 293,705,094 Hatton National Bank PLC 262,201,461 Nations Trust Bank PLC 225,628,950 Bank of Ceylon 200,000,000 Cargills Bank 50,762 1,507,693,657 134 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Shareholder Information

The Ordinary shares of the Company are listed in the Colombo Stock Exchange of Sri lanka. The Audited Financial Statements of the Company for the year ended March 31, 2018 and copies of this annual report have been submitted to the Colombo Stock Exchange

Distribution of Shareholders

31 March 2018 31 March 2017 Shareholdings No of Total Holding Total Holding No of Total Holding Total Holding Shareholders % Shareholders %

1 to 1,000 Shares 2,470 751,773 0.07 2,414 752,100 0.07 1001 to 10,000 Shares 1,747 7,062,214 0.62 1,779 7,255,707 0.64 10001 to 100,000 Shares 859 29,451,740 2.59 889 30,613,966 2.69 100001 to 1,000,000 Shares 206 51,591,515 4.54 215 52,825,905 4.64 Over 1,000,001 Shares 25 1,048,676,354 92.19 26 1,046,085,918 91.96 Total 5,307 1,137,533,596 100 5,323 1,137,533,596 100

Composition of Shareholders Individual 5,156 122,571,366 11 5,180 129,836,369 11 Institutional 151 1,014,962,230 89 143 1,007,697,227 89 Total 5,307 1,137,533,596 100 5,323 1,137,533,596 100

Residence 5,266 710,291,688 62 5,281 708,814,821 62 Non-Residence 41 427,241,908 38 42 428,718,775 38 5,307 1,137,533,596 100 5,323 1,137,533,596 100

As at % As at % 31 March 2018 31 March 2017

Softlogic Holdings PLC 504,957,858 44.39 498,696,347 43.84 Merrill Lynch Pierce Fenner & Smith-TPG Growth III SF Pte Ltd 328,258,328 28.86 328,258,328 28.86 HSBC International Nominess Ltd - Morgan Stanley and CO INTL PLC-OW 49,936,394 4.39 49,936,394 4.39 BNY-CF Ruffer Investment Fund : CF Ruffer Pacific Fund 36,148,930 3.18 36,148,930 3.18 Softlogic Holdings PLC A/C No 3 26,184,018 2.30 26,184,018 2.30 Softlogic Holdings PLC A/C No 2 26,184,018 2.30 26,184,018 2.30 Commercial Bank of Ceylon PLC/Softlogic Holdings PLC 16,452,405 1.45 16,452,405 1.45 Mr. Chaminda Dilantha Weerasinghe (Deceased) 9,375,000 0.82 9,375,000 0.82 Mr. P P Subasinghe 7,266,809 0.64 7,483,988 0.66 Union Bank of Colombo Ltd/Softlogic Holdings PLC 5,655,789 0.50 5,655,789 0.50 Softlogic Life Insurance PLC A/C 02 (Life Fund) 5,500,000 0.48 5,500,000 0.48 135 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Shareholder Information

As at % As at % 31 March 2018 31 March 2017

Pictet and CIE (Europe) S.A.S/A Ruffer Sicav-Ruffer Global Smaller 4,000,000 0.35 4,000,000 0.35 CBHK S/A Platinum Broking Company Ltd 3,523,601 0.31 3,523,601 0.31 Dr. L. D. A. C. Luvis 3,441,720 0.30 3,441,720 0.30 Dr. W. M. S. Welagedara 3,375,000 0.30 3,375,000 0.30 Mr. A. U. Maniku 3,036,050 0.27 3,036,050 0.27 Mr. H. K. J. Dharmadasa 2,788,920 0.25 2,788,920 0.25 Mr. A. H. Weerasuriya 2,700,000 0.24 2,700,000 0.24 Mr. M. F. Hashim 2,055,360 0.18 2,055,360 0.18 Ms. Theja Thushari Weerasinghe 1,682,700 0.15 - - Softlogic Finance PLC 1,467,834 0.13 - - Estate of Mr. Tissa Weerasinghe - - 3,000,000 0.26 1,043,990,734 91.78 1,037,795,868 91.23 Shares Held by the Balance Shareholdings 93,542,862 8.22 99,737,728 8.77 Total Issued Shares 1,137,533,596 100.00 1,137,533,596 100.00 Public Shareholding 222,035,381 19.52% 230,221,953 20.24% Total Number of Public Shareholders 5,295 5,318

Share Trading

2017/18 2016/17

Market Prices (Rs.) Highest (02-Oct-17) 29.00 32.50 Lowest (26-Mar-18) 23.00 23.20 As at Year end (29-Mar-18) 27.50 25.80

No of Trades 2,211 2,771 No of Shares Traded 12,594,870 107,968,126 Value of Shares Traded (Rs.) 318,782,936 2,753,326,005 Market Capitalisation (Rs.) 31,282,173,890 29,348,366,777

Earnings per Share 1.53 0.90 Dividend per Share 0.60 0.95 Net Assets per Share 6.59 5.64 P/E Ratio 17.97 28.55 136 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Five Year Summary

Year ended 31 March 2018 2017 2016 2015 2014 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000

Income Statement Revenue 12,025,178 10,396,219 9,952,385 8,593,473 7,962,485 Cost of Sales (6,476,262) (5,683,140) (5,391,656) (4,641,170) (4,073,338) Gross Operating Profit 5,548,916 4,713,079 4,560,729 3,952,303 3,889,147 Other Laboratory Income 89,716 97,661 89,308 60,847 57,521 Administration & Distribution Expenses (2,653,562) (2,446,357) (2,591,220) (2,288,248) (2,029,621) Profit from Operations 2,585,793 2,041,712 2,058,817 1,724,902 1,917,047 Other Income 821,163 80,820 83,074 73,682 89,468 Fair Value Adjustment of the Investment Property - - - 513,364 83,690 Exchange Gain/(loss) - - - (47,321) (138,100) Share of Profit/(Loss) of Associate (3,609) (21,833) - - - Profit Before Interest & Tax 3,403,347 2,100,699 2,141,891 2,264,627 1,952,105 Finance Income 65,791 31,376 155,945 42,769 28,621 Finance Expenses (869,506) (834,867) (715,050) (564,008) (606,361) Profit Before Tax 2,599,632 1,297,208 1,582,787 1,743,388 1,374,365 Income Tax (699,567) (177,206) (193,818) (160,735) (169,219) Profit After Tax 1,900,064 1,120,002 1,388,969 1,582,653 1,205,146 Minority Interest (161,545) (91,984) (206,590) (165,919) (254,557) Profit after Minority Interest & Tax 1,738,519 1,028,019 1,182,378 1,416,734 950,589

Balance Sheet Property, Plant & Equipment 18,035,916 15,341,387 13,358,513 11,856,403 10,625,083 Investment Property - - - 2,698,000 2,184,636 Investment in Associate 31,558 8,167 30,000 Intangible Assets 548,707 548,707 548,707 548,707 548,707 Financial Assets 345,762 349,972 407,624 598,882 430,999 Deferred Tax Assets - 107,562 - - 44,674 Inventories 523,341 515,311 444,058 381,062 354,587 Trade and Other Receivables 534,427 475,412 396,854 373,759 365,075 Other Current Assets 413,748 422,236 560,962 361,714 323,574 Loans Granted to Related Parties - - 116,845 149,564 275,269 Cash and Bank Balances 1,297,340 1,072,828 903,991 1,246,618 192,422 Total Assets 21,730,797 18,841,583 16,767,555 18,214,709 15,345,026

137 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Five Year Summary

Year ended 31 March 2018 2017 2016 2015 2014 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000

Issued Share Capital 4,748,108 4,748,108 4,748,108 3,902,400 3,902,400 Reserves 2,376,640 2,311,857 1,685,824 1,593,240 1,336,064 Available for Sale Reserve 79,448 92,513 159,304 296,713 128,829 Reserve on Consolidation (862,299) (840,432) (832,200) (2,345,962) (2,338,291) Retained Earnings 1,149,357 100,010 170,703 2,575,322 1,731,408 Minority Interest 700,717 946,375 951,522 1,182,652 1,100,819 Total Equity 8,191,972 7,358,431 6,883,262 7,204,365 5,861,229

Amount due on Leasehold Property 22,057 26,129 30,201 34,273 38,344 Interest Bearing Long Term Liabilities 6,611,898 6,930,175 6,189,792 7,032,828 5,850,962 Deferred Tax 1,312,292 271,906 223,066 223,957 226,936 Deferred Liabilities 465,672 400,973 351,282 344,721 261,892 Trade Creditors 569,383 439,886 457,754 372,769 305,159 Other Payables 679,246 1,014,984 848,573 1,650,525 289,947 Amount payable in Lieu of Investment in Associate - - 30,000 Amount due on Leasehold Property 4,072 4,072 4,072 4,072 4,072 Interest Bearing Borrowings & Bank Overdraft 3,874,204 2,395,027 1,749,551 1,347,199 2,506,485 Total Equity & Liabilities 21,730,797 18,841,583 16,767,555 18,214,709 15,345,026

Net Cash From Operating Activities 2,580,345 1,528,120 1,735,908 3,276,993 1,610,363 Net Cash Flows Used in Investing Activities (1,879,670) (2,099,832) (178,812) 1,589,527 (2,667,789) PBIT/Turnover (%) 22 21 23 27 25 GP Margin (%) 46 45 46 46 49 Return on Equity (%) 23 15 20 22 21 Return on Assets (%) 9 6 8 9 8 Dividend Pay Out (%) 39.26 105.12 182.7 38.76 63.95 Debts to Equity 1.28 1.27 1.15 1.16 1.43 Interest Cover 2.99 2.55 3.26 3.85 2.85 Quick Asset Ratio 0.44 0.51 0.64 0.63 0.37 Dividend per Share 0.60 0.95 1.94 0.50 0.55 Net Assets Value per Share 6.59 5.64 5.21 5.48 4.33 Earnings per Share 1.53 0.90 1.06 1.29 0.86 138 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Notice of Meeting

NOTICE IS HEREBY GIVEN that the Thirty Eighth Annual General Meeting of Asiri Hospital Holdings Note: PLC will be held at Hotel Janaki, Fife Road, Colombo 05 on Friday the 14th day of September 2018 at A member entitled to attend and vote at the 12.00 p.m. for the following purposes: Meeting is entitled to appoint a Proxy who need not be a member, to attend instead of him/her. 1. To receive and consider the Annual Report of the Board of Directors and Financial Statements of the Company and of the Group for the year ended 31st March 2018 together with the Report of A Form of Proxy is enclosed in this Report. the Auditors thereon. The completed Form of Proxy should be 2. To ratify the Interim Dividend of Rs. 0.60 per share paid on 29th March 2018 as the Final Dividend deposited at the Registered Office of the for the year ended 31st March 2018. Company, No. 181, Kirula Road, Colombo 05, not less than 48 hours before the time for holding 3. To re-elect Dr. S Selliah who retires by rotation in terms of Article 24(6) of the Articles of the Meeting. Association, as a Director of the Company.

4. To re-elect Dr. K M P Karunaratne who retires by rotation in terms of Article 24(6) of the Articles of Association, as a Director of the Company.

5. To re-elect Mr. A N Thadani who retires in terms of Article 24(2) of the Articles of Association, as a Director of the Company.

6. To pass the ordinary resolution set out below to re- appoint Mr. G L H Premaratne who is 70 years of age, as a Director of the Company.

“IT IS HEREBY RESOLVED THAT the age limit stipulated in Section 210 of the Companies Act No. 07 of 2007 shall not apply to Mr. G L H Premaratne who is 70 years of age and that he be and is hereby re-appointed as a Director of the Company in terms of Section 211 of the Companies Act No. 07 of 2007”.

7. To re-appoint Messrs Ernst & Young as the Auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration.

8. To authorise the Directors to determine and make donations for the year ending 31st March 2019 and up to the date of the next Annual General Meeting.

By Order of the Board

Sgd. Softlogic Corporate Services (Pvt) Ltd Secretaries

Colombo 29 June 2018 139 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Form of Proxy

*I/We ...... of ...... being* a member/ members of ASIRI HOSPITAL HOLDINGS PLC, do hereby appoint ...... of ...... or failing *him/her

Mr. A K Pathirage of Colombo or failing him Dr. S Selliah of Colombo or failing him Dr. K M P Karunaratne of Colombo or failing him Mr. G L H Premaratne of Colombo or failing him Mr. S A B Rajapaksa of Colombo or failing him Mr. J E Huxtable of Colombo or failing him Mr. V Bali of India or failing him Mr. A N Thadani of India as *my/our Proxy to represent *me/us and to speak and vote for *me/us on *my/our behalf at the 38TH ANNUAL GENERAL MEETING OF THE COMPANY to be held at Hotel Janaki, Fife Road, Colombo 05 at 12.00 p.m. on the 14th day of September 2018 and at any adjournment thereof, and at every poll which may be taken in consequence thereof.

For Against 1. To receive and consider the Annual Report of the Board of Directors and Financial Statements of the Company and of the Group for the year ended 31st March 2018 together with the Report of the Auditors thereon. 2. To approve the interim dividend of Rs. 0.60 per share paid on 29th March 2018 as the final dividend for the year ended 31st March 2018. 3. To re-elect Dr. S Selliah who retires by rotation in terms of Article 24(6) of the Articles of Association, as a Director of the Company.

4. To re-elect Dr. K M P Karunaratne who retires by rotation in terms of Article 24(6) of the Articles of Association, as a Director of the Company. 5. To re-elect Mr. A N Thadani who retires in terms of Article 24(2) of the Articles of Association, as a Director of the Company.

6. To pass the ordinary resolution set out below to re-appoint Mr. G L H Premaratne who is 70 years of age, as a Director of the Company.

“IT IS HEREBY RESOLVED THAT the age limit stipulated in Section 210 of the Companies Act No. 07 of 2007 shall not apply to Mr. G L H Premaratne who is 70 years of age and that he be and is hereby re-appointed as a Director of the Company in terms of Section 211 of the Companies Act No. 07 of 2007”. 7. To re-appoint retiring Auditors Messrs Ernst & Young and to authorise the Directors to fix their remuneration.

8. To authorise the Directors to determine and make donations for the year ending 31st March 2019 and up to the date of the next Annual General Meeting.

Signed this …………… day of ………………………. Two Thousand and Eighteen. *Signature/s : ......

Note: ee *Please delete the inappropriate words. ee Instructions as to completion are noted on the reverse hereof. ee The shareholders / proxy holders are requested to bring their National Identity Card or Passport when attending the meeting. 140 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18 Form of Proxy

Instructions as to Completion 1. Kindly perfect the Form of Proxy after filling in legibly your full name and address and sign in the space provided. Please fill in the date of signature.

2. A Member entitled to attend and vote at the Meeting is entitled to appoint a Proxy who need not be a member, to attend and vote instead of him. Please indicate with an “X” in the boxes provided how your Proxy is to vote on each resolution. If no indication is given, the Proxy in his discretion will vote as he thinks fit.

3. In the case of a Corporate Member, the Form of Proxy must be completed under its Common Seal, which should be affixed in the manner prescribed by the Articles of Association.

4. If the Form of Proxy is signed by an Attorney, the relevant Power of Attorney should also accompany the completed Form of Proxy, in the manner prescribed by the Articles of Association.

5. The completed Form of Proxy should be deposited at the Registered Office of the Company, No. 181, Kirula Road, Colombo 05, not less than forty eight (48) hours before the time appointed for the holding of the meeting.

Please provide the following details : Shareholder’s N.I.C./ Shareholder’s Folio Number of Shares Proxy Holder’s N.I.C. Passport/ Company No. Held No. (if not a Director) Registration No. Corporate Information

Name of the Company Audit Committee Subsidiary Companies Asiri Hospital Holdings PLC Chairman ee Central Hospital Ltd ee Mr. S A B Rajapaksa - Independent Non- # 114, Norris Canal Road, Colombo 10. Registered Office executive Director ee Asiri Central Hospitals Ltd # 181, Kirula Road, Colombo 05, Sri Lanka. # 114, Norris Canal Road, Colombo 10. Committee Members ee Asiri Surgical Hospital PLC Office & Administrative Complex ee Mr. G L H Premaratne - Independent Non- # 21, Kirimandala Mawatha, Colombo 5. Asiri Surgical Hospital PLC executive Director ee Asiri Diagnostics Services (Pvt) Ltd # 21, Kirimandala Mawatha, Colombo 05, Sri Lanka. ee Mr. J E Huxtable - Independent Non-executive # 181, Kirula Road, Colombo 05. Telephone : 0114524400 Director ee Asiri Hospital Kandy (Pvt) Ltd Email : [email protected] # 21, Kirimandala Mawatha, Colombo 5. Web : www.asirihealth.com Frequency of Meetings ee Asiri Hospital Matara (Pvt) Ltd Committee meets quarterly # 26, Esplanade Road, Uyanwatte, Matara. Company Registration Number ee Asiri Laboratories (Pvt) Ltd PQ204 Remuneration Committee # 181, Kirula Road, Colombo 5. Chairman Legal Form ee Mr. G L H Premaratne - Independent Non- Associate Companies A quoted public company incorporated in Sri Lanka executive Director Digital Health (Pvt) Ltd on 29th September 1980, under the Companies Act # 475, Union Place, Colombo 2. No.17 of 1982, with limited liability. Committee Members ee Dr. S Selliah - Independent Non-executive Auditors Re-registered on 30th September 2008 under the Director Messrs Ernst & Young Companies Act No. 07 of 2007. (Chartered Accountants) Frequency of Meetings # 201, De Saram Place, Colombo 10. Stock Exchange Listing Committee meets once a year The Ordinary Shares of the Company have been Secretaries listed with the Colombo Stock Exchange since Related Party Transactions Review Committee Messrs Softlogic Corporate Services (Pvt) Ltd June 1986. Chairman # 14, De Fonseka Place, Colombo 5. ee Mr. J E Huxtable - Independent Non-executive Directors Director Bankers ee Mr. A K Pathirage ee Bank of Ceylon ee Dr. K M P Karunaratne Committee Members ee Cargills Bank PLC ee Dr. S Selliah ee Mr. G L H Premaratne - Independent Non- ee Commercial Bank of Ceylon PLC ee Mr. S A B Rajapaksa executive Director ee Hatton National Bank PLC ee Mr. G L H Premaratne ee Mr. S A B Rajapaksa - Independent Non- ee Nations Trust Bank PLC ee Mr. J E Huxtable executive Director ee Sampath Bank PLC ee Mr. V Bali ee Mr. A N Thadani Frequency of Meetings Committee meets at least once a quarter ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2017/18